India ranks low as investors' near-term choice: study

By Our Special Correspondent

NEW DELHI, APRIL 8. Executives of Global 1,000 companies may consider India as a destination that presents good opportunities for investment but few have the country on their list of likely investment destination over the next one to three years.

Government bureaucracy has been cited as the main deterrent to investment while corruption ranks rather low in the main obstacles, according to a report by the noted consulting firm, A. T. Kearney.

``When it comes to foreign direct investment (FDI), India is at an important cross-roads - investors are generally sanguine about the country but reluctant to invest because of a perception that it has done less than other emerging markets to reduce fundamental obstacles to investment,'' says A. T. Kearney vice- president, Mr. Paul A. Laudicina. ``As the Indian government commits itself to increasing its share of FDI, our study suggests the country will not realise this promise unless substantial changes are made in the investment environment,'' he added.

The report ``Foreign direct investment audit: India'' is designed to illustrate India's assets and liabilities as seen by Global 1,000 executives and to suggest ways to overcome the liabilities and turn positive sentiment into investment. Of the executives surveyed, 67 per cent were positive about the country as an investment destination and 61 per cent of those with existing investments said they were likely to add to those investments. But among the companies without investments in India, only 14 per cent of the surveyed executives characterised their likelihood of investing in India as high. A full 71 of companies without existing investments in India said their likelihood of investing in India was low.

Significantly, the January 2000 study by the same firm revealed that only 13 per cent of the executives said there was a higher likelihood of investing in India over the next three years and over one-thirds discounted any intention of investing. ``The good news is that most companies investing in India say they have a high likelihood of making new investments within the next three years,'' noted the A. T. Kearney India Managing Director, Mr. Srini Srinivasan. ``This suggests that India's vast potential retains sufficient allure, at least for committed firms, The challenge for India lies in changing the investment liabilities and convincing new investors of the country's continuing potential.''

As many as 39 per cent cited the country's bureaucracy as the major obstacle to investing in India, Another 28 per cent cited the slow pace of reforms while eight per cent cited government involvement in the economy and six per cent cited corruption. ``Competition with China remains a significant hurdle which must be addressed if Indian wants to translate its overall investment destination attractiveness into high yield of actual FDI flows,'' noted a senior company official.

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Section  : Business
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