India Attraction

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Growing Beyond

Ready for the transition
Ernst & Young's 2012 attractiveness survey

India

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Ready for the transition
Ernst & Young's attractiveness survey 2012

India

Contents
2 4 India: ready for the transition? Executive summary

6
“An FDI hot spot in a cooling world”
7 8 9 10 11

India in 2011
Performance 2011: foreign investment decisions in India increase by 20% Global ranking: third in terms of FDI value; fourth for number of projects Where from: India’s FDI investors Whereto:India’stopfiveFDIdestinations Investment prospects for 2012

12
“Manufacturing and shared services”
13 14 16

India’s attractiveness pillars

What investors seek in India: growth and cost competitiveness What investment projects are there in India: manufacturing — the next big leap Looking closer: FDI by sector Infrastructure / Automotive / Retail and consumer products / Technology / Financial services / Life sciences / Cleantech

30
“Transitioning toward a more open and innovative economy” 31 32 34

Meeting investors’ 2020 agenda

Key location factors: investors are more demanding toward future business conditions India's fundamental advantages are widening its appeal to investors Innovation as a growth engine for India

38

Methodology

Ernst & Young's 2012 India attractiveness survey Ready for the transition

1

Foreword

India: ready for the transition?
Welcome to the second edition of the Ernst & Young's India attractiveness survey. The 2012 India attractiveness survey was carried out at a time when the dialogue among business leaders about the economic crisis was at its peak and investors were in “caution” mode. Regardless of today's crisis, a strong increase in the number of foreign direct investment (FDI) projects in India is a clear indication that global investors view the country as an attractive investment destination. More than half of our respondents remain convinced about India’s long-term prospects and plan to strengthen their operations in the country, with more than two-thirds of those interested in India, planning to implement projects in the short term. The fundamentals that make India attractive to investors remain intact. The high potential of the domestic market driven by an emerging middle class, cost competitiveness and a mammoth pool of talent continue to make India one of the most preferred destinations for our survey respondents this year as well. The country’s domestic demand-driven growth model is playing a catalyst role in attracting foreign investments in the country. Although the ongoing global uncertainty stemming from recessionary concerns and sovereign debt crisis has, to some extent, prompted some discomfort among global investors to make long-term commitments, India’s inherent advantages and its proven resilience to counter macroeconomic challenges far outweigh these concerns. India is transitioning into the next phase of the growth cycle. Manufacturing will likely play a leading role in this growth trajectory. While the country leads the world ranking as a shared services destination, it is rapidly emerging as a manufacturing location for many foreign corporations. By 2020, 25% of our survey respondents see India among the world’s leading three destinations for manufacturing. The new National Manufacturing Policy introduced by the government of India (GOI) is expected to...
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