Foreign direct investment (FDI) is set to surge in India over the next decade, according to Ernst & Young's Indian Attractiveness survey. The survey asked more than 500 global business leaders about the potential of the Indian market.

A large majority of the respondents of the survey believe that by as early as 2020, India will become a global leader in education, R&D, innovation and as a producer of high value-added goods and services. Seventy five per cent of the global businesses which took part in the survey and are already present in India said that they would expand their operations.

Demographic profile

“With economic growth and GDP projected to surpass 8 per cent annually and the number of people in the Indian middle-class set to treble over the next 15 years, with a corresponding impact on disposable income, domestic demand is expected to grow exponentially. India's young demographic profile also helps it provide an increasingly well-educated and cost competitive labour force. These factors put India in a good position to attract an increasing proportion of global FDI,” said Mr Rajiv Memani, Country Managing Partner, Ernst & Young India.

The FDI data shows that India is still in recovery mode from the drop off in inward investment reported in 2009 following the global financial crisis. The number of FDI projects in 2010 remained constant as against 750 in 2009.

The long-term trend over the last decade though shows a consistent upward movement. Overall project numbers in 2010 were 60 per cent higher than that in 2003 and the number of jobs created was 30 per cent higher.

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