According to Business Standard (15th August’05), AT Kearney has come out with the rankings of 2004 for countries in terms of FDI preferences.

The order goes like this –
– China
– US
– UK
– Germany
– France
– Australia
– Hong Kong
– Italy
– Japan
– Russia

These FDI Confidence Index Rankings are based on an annual survey of CEOs, CFOs, and other top notch professionals in the Global top 1000 Companies, and is carried out by the Global Business Policy council of AT Kearney.

As for India, it moved from 6th place to 3rd place, as compared to its standing last year. More importantly, the Gap between US and India has also reduced significantly.
According to the survey, China’s Index was 2.03; US was 1.45 and India 1.4
Thus, there is not much of a gap between the 2 countries. This fact has been endorsed by US, which has identified India as the new “economic star”, along with China.

Another part of the survey talks about the Mergers and Acquisitions in the world, a factor taken into account in gauging the movement of the economy in the business environment. If a country has a high growth in Mergers and Acquisitions, it indicates that the market holds a high potential for growth and has a lot of business opportunity to offer, resulting in aggressive pitching by the stakeholders. Of course, when there is so much being offered, everyone would like to have a larger share of the pie!
Incidentally, In terms of the growth in this sector, India has the 2nd highest growth after Japan. With the FDI ease in the real estate sector, more M&As are expected in the coming year. Apart from Real Estate, other potential sectors being seen as potentially “susceptible” to M&As are – Oil and Gas, IT, HealthCare, Pharma and Travel/Tourism.

But, still there are certain attributes we need to look into, more closely. Business Standard has identified 3 key factors to ensure global competitiveness –
– Bureaucracy
– Political stability
– Maintaining the low-cost advantage.

With competition extending beyond the sub-continent, India cannot harp on its low-cost advantage for long. The South-Asian countries (especially Indonesia, Thailand and Singapore) as well as China are fast-emerging as good alternatives. It is only a matter of exploring these options for the Investors sooner or later. Unless India has something tangible to offer, apart from low-cost, sustaining the growth would be difficult.

Looking ahead, certain key areas where we either have a stronghold, or have a “potential” stronghold, need to be developed further. These sectors are the IT Sector, BPO, R&D and Knowledge Management Activities. India still leads in most of these areas, and has a competitive advantage with respect to its location, competencies, cost, processes and quality deliverables.
As each one of these factors is critical to our growth, we need to reinforce each of them, and capitalize on them in the volatile global business environment.

But for now, the Confidence Levels look promising!
From an “Economics” perspective (for the more ‘qualified’, it is NOT Economic ..), in a Free Market Economy, it is an ideal condition that the buyer as well as the seller are smiling 🙂 ..
I am not sure of the “Ideal”ness, but yes, the Smiles are there for sure 😀

** For more Details on the report, Click Here. The Report is available online !**

2 Responses

  1. I wouldnt subscribe to the part about US being the second largest in terms of FDI. Is this figure based on actuals or absolute inflow of FDI.

    Please note, most of the FDI in the US, would not be to channel enterprise, as in the case of India as well , and is directed according to whims and whammies of Wall street and private equities.
    How else would you justify the burgeoning budger deficit.

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