EY's 2015 India attractiveness survey Ready, set, grow Number one FDI destination
Investors highlight improvements
Rank the three most attractive markets for investment in the next three years (three possible answers)
India has emerged as the number one Foreign Direct Investment (FDI) destination in the world during the 1H15, with FDI capital inflows of US$30.8b.
Please rate the following parameters for investment in India as very, fairly, little or not at all attractive. (Percentage of respondents who rated the parameter as “very attractive” or “fairly significant”)
India
32% 47%
15%
China
38%
12%
Southeast Asia Brazil
5
21%
Latin America
3%
18%
Middle East
4%
17%
Western Europe
3%
Northern Africa
4
Sub-Saharan Africa Japan Russia
Commonwealth of Independent States (CIS)
Can't say
11
3% 10% 3% 9 % 3% 9 % 1% 6% First mention Total mentions
2
%
Source: EY's 2015 India attractiveness survey (total respondents: 505).
Manufacturing leads investment plans
Manufacturing has regained its share for 2014, amounting to approximately 46% of FDI capital flows.
FDI capital (share) 2.6 15.1
23.1
45.5
37.0
36.8 2014
2.8
Strategic Retail Manufacturing
37.1
What is the nature of the business activity you are planning in India? (Open-ended question — multiple responses)
62%
42%
21% Sales and marketing
Manufacturing
FDI investment
rise in FDI investment
145,000
39%
+221%
additional jobs
Services
Source: EY's 2015 India attractiveness survey (total respondents: 265 with overseas expansion plans, who are considering entering or increasing existing operations in India over the next year).
highest ever FDI capital per project
82
%
86
%
Stable political and social environment
FDI capital increase in manufacturing
Source: fDi Markets, May and September 2015.
74% 2015
59% 2014
Domestic market 81
%
Macroeconomic stability
Research and development
72%
76
82
%
%
70
69%
68%
How do you see India in 2020?
Labor skills
76
%
FDI policy
Investors see India speeding up pace toward becoming one world's top destinations for manufacturing, as well as a regional hub for operations.
%
78
Among the top three growing economies in the world
%
Among the world’s leading three destinations for manufacturing
Ease of doing business
60%
67%
A regional and global hub for operations
57%
Improvements in 2015
Within six months of its announcement, 55% of our survey’s respondents were aware of the Make in India program. However, there is a need to create visibility for the program among non-established players, as only 10% of those without a presence in India were aware of it.
71%
awareness among established respondents
69% among those who are aware of
the program are likely to invest in manufacturing in the next five years
Source: EY’s 2015 India attractiveness survey (total respondents: 234, established in India: 173.) Note: The question on awareness of the Make in India program was asked to respondents from manufacturing-related sectors, with overseas expansion plans.
37%
29%
35%
24%
9%
21% 2015
2014
Source: EY's 2015 India attractiveness survey (respondents: 250, asked to half of the sample); EY's 2014 India attractiveness survey (total respondents: 502).
Source: EY's 2015 India attractiveness survey (total respondents 505); EY's 2014 India attractiveness survey (total respondents 502).
Make in India program: positive for manufacturing
Total awareness
Source: fDi Markets, May 2015.
FDI capital
US$91m
total jobs created by FDI
Labor costs
+135 %
32 %
55%
Services
2013
rise in FDI projects
US$25b
%
1%
37 %
projects
12%
%
Highlights of 1H15
2014
680
27
%
%
10%
North America
Central Eastern Europe
60%
India in 2020: a promising outlook
Reforms expected to drive growth
Priorities for action
A number of recent government reforms are well received by investors, who expect them to increase India’s FDI attractiveness significantly.
In your opinion, what should be the three priority measures for improving India’s investment climate?
What impact do you think the following recent reforms by the Indian Government will have in attracting FDI? (Percentage of respondents who rated the reforms as “very significant” or “somewhat significant”) Investment and administrative reforms Investment in infrastructure projects and 100 Smart Cities Schemes on financial inclusion and Digital India
89% 83%
Legislation for land acquisition
75%
Reforms to permit FDI in insurance and defense
71%
Tax-related reforms Corporate tax rate reduction from 30% to 25% in next four years
83
Implementation of Goods and Service Tax (GST) by 2016
81%
Favorable tax regime for real estate investment trusts and alternate investment funds
78%
Reduction in tax for royalty and fees for technical services (FTS)
77
Deferment of General Anti-Avoidance Rules Source: EY's 2015 India attractiveness survey (total respondents 505).
66%
47%
44%
Improve infrastructure
Enhance ease of doing business and transparency
Streamline taxation
31%
31%
Simplify labor laws
Implement economic reforms
Source: EY's 2015 India attractiveness survey (total respondents 505).
%
65%
%
Learn more Find out what’s activating growth in India Download EY’s 2015 India attractiveness survey at ey.com/emergingmarkets
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