Sharp rise in foreign direct investment over next ten years

According to a study by Ernst & Young on India's attractiveness, this country is expected to attract significant interest from foreign investors over the next 10 years. Whilst US investment in this country is falling, European and Asian investors are taking their place. In total, 68% of survey respondents intend to maintain or indeed expand their operations on the Indian market.

Despite the crisis and the overall fall in FDI throughout the world, this study highlights stability in investment projects in India, of which there were around 750 between 2009-2010. Although the number of project start-ups and jobs created is well below the record 971 projects registered in 2008, the trend for the next 10 years is on the rise. According to the investors surveyed, this rise is expected to continue at a steady, not spectacular, pace. Since 2003, the number of new projects has increased by 60%, accompanied by a 30% increase in FDI-generated job creation. After a time of crisis followed by a recession, North America and Western Europe are beginning to see the shoots of modest, indeed, fragile economic growth, while strong growth countries such as India are making rapid progress and are achieving growth rates not much below those attained before the crisis.

Despite a fall in interest, the US is still the biggest investor country on the Indian market, accounting for 30% of FDI projects in 2009, as opposed to 45% in 2003. The US is followed by the United Kingdom and Germany with 87 and 75 projects respectively in 2009. Although information technology (software and services) is perceived as being the most attractive sector by investors, this sector is also the one that has experienced the sharpest medium-term falls. Despite this fall, 31% of those interviewed consider that this sector is still the most attractive investment sector. It is now among the drivers of the economy, along with the automotive industry, consumer goods and infrastructure. In addition to the results for these sectors, the study reveals strong investment growth in health (209%), defence and space (180%), the plastics industry (142%), renewable energies (105%) and medical equipment (87%). According to survey respondents, India's main competitors in terms of FDI attractiveness are China (for 60% of those surveyed) and Brazil (9%) on the fast growth markets and the US (17%) and Germany (9%) among developed countries. India's main competitive advantages include the size of its domestic market and customer access. Finally, with GDP expected to rise and more readily available disposable income for the middle classes, the Indian market is marked by enormous potential in its internal market, as confirmed by 55% of those polled. (I.L./transl.fl)