India beats US, ranks second in FDI's most wanted list

The India growth story is getting bigger and better. For the first time, India has emerged stronger on the global investment radar in 2005, overtaking the United States for the first time to become the secondmost attractive FDI destination in the world.

According to the latest FDI Confidence Index, prepared by global management consulting firm AT Kearney, India is now second only to China in the FDI attractiveness ranking, scoring 1.951 on a scale of 0-3.

The survey of executives from the world’s largest companies ranked India second only to China, which retained its top slot for the fourth year running.

China scored 2.197 points, while the US scored 1.42 points. "India is on the cusp of an FDI take-off. However, for India to harness manufacturing investor interest and evolve into an FDI capital-intensive hub, the government must maintain its reform orientation and overcome narrow business interests, consistently addressing the country’s infrastructure, logistics, and regulatory barriers," said Paul Laudicina, V-P and MD of Global Business Policy Council at AT Kearney.

The US dropped from second to third slot and the UK maintained its fourth spot on the list. Investor confidence in eastern European markets also witnessed a sharp increase during 2005.

But it was India that led the list of countries with the highest level of investment optimism, with over 47% investors expressing a positive change in outlook as compared to a year ago. The strong increase in investor interest in India is a more recent development.