The Indian business environment deter foreign investors and the country's macroeconomic uncertainties remain a concern, UN-ESCAP said in a report today.
"Elements of the Indian business environment continue to deter foreign investors. Macroeconomic uncertainties and structural constraints in India continue to concern foreign investors.
"India is experiencing slower economic growth, running a high current account deficit, and enduring high inflation," the 'UN-ESCAP Asia-Pacific Trade and Investment Report 2014' said.
However, the report said that in spite of these worries, foreign direct investment inflows into India grew by 16.5 per cent to USD 28 billion in 2013.
It said, with reforms of investments there is a potential for attracting higher rates on investments in India.
"FDI could help strengthen the economy, provide more decent and productive employment and encourage technological upgrading," report said.
It said many sectors retain equity limits on foreign ownership which is not unusual, however, finding suitable joint venture partner risks hampering FDI inflows, it added.
The report said, the FDI cap of 51 per cent in multi-brand retail is a major obstacle in the FDI inflows to the sector.
"Foreign investors are now waiting for positive signals from the new government elected in early 2014," it said.
About Asia-Pacific region, the report said the region remains the most dynamic pole of the global economy, however, growth in trade and investment is yet to return to its levels prior to global financial crisis.
"...Total exports and imports from the region grew by only 2 per cent in 2013 and were weak in the first half of 2014. Growth in 2015 is expected to increase to 7 per cent, but considerable uncertainties in global macro-economic prospects mean this is far from assured."
The overarching message of this year's report is that the lengthy shadows cast by the crisis highlight the need for economic rebalancing, said Shamshad Akhtar, UN Under-Secretary General and ESCAP Executive Secretary.
"In part, this requires refocusing on domestic value addition of exports, rather than increasing gross exports alone," he added.
