India has emerged as the most attractive investment destination, according to a Capital Confidence Barometer of EY (earlier known as Ernst & Young), a global tax and investment advisory firm.
While India has moved up to the top slot of the attractive investment destination list, China was down to the third slot. India is closely followed by Brazil.
The survey found that sharp currency depreciation and opening up of FDI in various sectors has made India an attractive destination for foreign investors.
“The observation underscores the long-term confidence that investors continue to maintain in India as an investment destination,” it says.
At the same time, due to the present macro economic pressures and heavy debt pile, several Indian companies are looking to divest non-core businesses.
“This has created a large opportunity for foreign players vying for a greater role in the Indian market. Sectors with the highest level of anticipated deal-making include Automotive, Technology, Life Sciences and Consumer Product,” it said.
The survey, which is based on a feedback from 1,600 senior executives across more than 70 countries, showed that the US, France and Japan as the top three preferred investor destinations.
Amit Khandelwal, National Leader & Partner (Transaction Advisory Services) of EY, said that the investor outlook for India remains positive, despite the challenges the country’s economy has faced in the recent past.
“At the same time, the improved condition of the world economy has helped increase confidence amongst deal makers, prompting them to take a bolder stance toward executing transactions. Also, the Fed’s reassurance on not pulling back stimulus in the near term has boosted confidence in the board rooms,” he said.
Thirty-eight per cent of the respondents believe that merger and acquisition (M&A) volumes in the country are expected to improve over the next 12 months, while 30 per cent feel that it will remain stable. Indian companies also reflect a concerted focus on job creation as well as optimising operations to deliver cost reduction, according to the findings.
Upbeat on Global Economy
The global executives’ sentiments have shown improvement, specifically with regard to plans for acquisitions and deals and are at a two-year high with credit and cash available for deals.
Almost 70 per cent of global executives expect deal volumes and deal sizes to improve over the next 12 months. Thirty-five per cent of global executives are planning acquisitions up from 25 per cent a year ago. The positive outlook around deal-making globally, stems from a growing economic confidence, which has increased to 65 per cent from 22 per cent over the last 12 months.
Those who see the economy declining fell to 11 per cent, its lowest level in two years. Growth is now a global imperative as almost 60 per cent of companies say they plan to accelerate their growth strategies over the next 12 months.