India remains a good destination for investments but it needs to strengthen governance and transparency to become more attractive for foreign investors, says an Ernst & Young survey.
The survey of over 500 foreign investors by global consultancy E&Y showed that India needs to focus on improving its current state of infrastructure and governance.
"More than three-fourth of the respondents surveyed mentioned that improving infrastructure is critical to enhancing attractiveness, while 60% emphasised need for better governance and transparency," the report said.
Nothwithstanding the global economic uncertainties, E&Y said that foreign investors see India as an attractive investment option.
The findings come against the backdrop of slowing economic growth and concerns about sluggish investments in the country.
Majority of the E&Y survey respondents said that they remain convinced about India's prospects and plan to strengthen their operations in the country.
"Two-thirds of the respondents are planning to implement projects in India in the near to short term," the report said.
The overall number of FDI projects rose 25% to 864 (worth $50.813 billion) in 11 months to November 2011, up from 691 projects (valued at $44.874 billion) in 2010.
"India's domestic demand-driven growth model is acting as a catalyst for attracting foreign investments into the country," E&Y India Country Managing Partner Rajiv Memani said.
Although the ongoing global uncertainty may have prompted global investors to become more cautious, India's inherent advantages and proven resilience to counter-act macroeconomic challenges generally outweighs these concerns," Memani noted.
According to the report, almost a third of respondents believed that India would have achieved double-digit growth rates by the end of this decade.
"While 55% of the survey respondents found China to be India's main competitor in terms of FDI attractiveness, this is down from the 60% response in the 2011 India Attractiveness Survey.
"Similarly, 8% saw US to be India's main competitor in the latest survey, which has reduced from 17% in the previous year," it added.
