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K.R. Srivats

"While the higher ranking indicates that there is greater interest among investors to look at India as an investment destination, the actual inflows are, however, a function of many other factors that investors look at before bringing in their investments," Mr Laudicina said.

New Delhi , Sept. 17

India has moved up nine places from an all-time low rank of 15 (September 2002) to 6th rank in the global management consulting firm A.T. Kearney's latest Foreign Direct Investment Confidence Index. Services sector investors ranked India as the 4th most attractive this year, up from 14th place in 2002.

The rankings of FDI Confidence Index, which are based on an annual survey of CEOs, CFOs and other top executives of Global 1000 companies, conducted by the Global Business Policy Council of A.T.Kearney, were released on Wednesday.

While the Asian region has strengthened its attractiveness as an FDI destination, China has further consolidated its position as the world's most attractive destination. China has also widened its lead over the US.

Except for September 2002, India's ranking in the FDI Confidence Index has been following a narrow range of 5th-7th position between 1998 and 2003.

More than a fifth of all global executives have now said that their outlook on India had improved over last year. The offshoring imperative has led to the surge in the ranking of India and many other developing countries such as Mexico, Poland, Russia and Brazil in the latest FDI Confidence Index.

But, a higher standing in the FDI Confidence Index, points out Mr Paul A Laudicina, Head of A.T.Kearney's Global Policy Council, doesn't mean large inflows of FDI in the coming days.

"While the higher ranking indicates that there is greater interest among investors to look at India as an investment destination, the actual inflows are, however, a function of many other factors that investors look at before bringing in their investments," Mr Laudicina told Business Line in a telephonic interaction from the US.

He pointed out that the deterrents of investments are not any different now as compared to the position a few years back. Investors have to cope with a bureaucratic business climate, ceilings on foreign ownerships, slower pace of reforms and infrastructural bottlenecks. "It's up to India to improve the situation", Mr Laudicina said.

The survey highlighted that India's recent success as a leading global hub for offshore business processes could lead to a more FDI friendly business climate, but is likely to hinge on whether the country can translate investor enthusiasm into long-term FDI commitments.

Mr Laudicina also held that the suspension of talks at the Cancun Ministerial of the World Trade Organisation (WTO) would not have any dramatic impact on foreign direct investment (FDI) decisions. He, however, highlighted that for a second year in a row, nearly two-thirds of global investors singled out global or regional trade initiatives, or lack there of, as the leading factor impacting their investment decisions after the recovery of the US economy.

"G-21 should think long and hard as to whether the suspension in talks is to anybody's advantage. We need to move ahead in trade agenda", he said.

Commenting on the recent backlash on outsourcing, especially in the US, Mr Laudicina held that outsourcing would create a win-win situation and that any legislative efforts to bring in curbs on such activities would be quite foolhardy.

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