INDIA CAPTIVATES
Reforms expected to drive growth
A number of recent government reforms are well received by investors , who expect them to increase India ' s FDI attractiveness significantly .
What impact do you think the following recent reforms by the Indian Government will have in attracting FDI ?
( Percentage of respondents who rated the reforms as " very significant " of " somewhat significant ")
Investment and administrative reforms
Investment in infrastructure projectsand 100 Smart Cities
Schemes on financial inclusion and Digital India Legislation for land acquisition Reforms to permit FDI in insurance and defense
Tax-related reforms Corporate tax rate reduction from 30 % to 25 % in next four years
Implementation of Goods and Service Tax ( GST ) by 2016
Favorable tax regime for real estate investment trusts and alternate investment funds
Reduction in tax for royalty and fees for technical services ( FTS )
Deferment of General Anti-Avoidance Rules
Source : EY ' s 2015 India attractiveness survey ( total respondents 505 ).
89 %
83 % 75 % 71 %
83 %
81 %
78 %
77 % 65 %
Foreword
The global investor interest in a country is poised to become the world ’ s fastest-growing major economy in 2015 . Indeed , at a time when most mature markets are expecting a rebound in growth and emerging markets are slowing down , India ’ s developing economy is set to buck the trend . The country ’ s vast domestic market and its lowcost , skilled labor market continue to be its most attractive features . The improvement of India ’ s macroeconomic indicators - in part , helped by declining oil prices - and ongoing efforts to revitalize growth with various new initiatives - such as Make in India , Digital India and 100 Smart Cities - have also offered new hope . We ’ ve seen a sharp turnaround in FDI in 2014 . After declining for two successive years , investment in India has bounced back with a 32 % growth to US $ 25b - significantly ahead of the 7 % growth in FDI seen globally . Further , with FDI capital inflows of US $ 30.8b during the first half of calendar year 2015 , India has emerged as the number one FDI destination in the world . International corporations with a presence in India are far more optimistic about the country ’ s prospects than those who are not yet established in the country . The bigger organizations with annual revenues exceeding US $ 2b are more upbeat about India than smaller organizations ( with annual revenue less than US $ 2b ).
Manufacturing is gaining momentum . Not only has the manufacturing sector led FDI inflows during 2014 and enhanced its share in total FDI investments , it also features prominently in investors ’ plans for the future . While traditional FDI hot spots , such as Mumbai , Delhi , Bangalore , Chennai and Pune , continue to lead investment flows , new destinations are also emerging in tier-two locations . Cities such as Ahmedabad , Jaipur and Vadodra , are also seeing rapid growth . To accelerate investments further India ’ s chief priorities should be improving infrastructure , enhancing the ease of doing business , introducing a uniform goods and services tax , improving labor laws , initiating investor-friendly FDI policies and strengthening dispute-resolution processes . While the speed of economic reforms may vary , particularly given the challenges of India ’ s multi-party democracy and legacy systems , the direction is firmly set toward higher growth .
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