Author: Our Corporate Bureau
Publication: The Financial Times
Date: May 30, 2003
URL: http://www.sulekha.com/redirectnh.asp?cid=310182
A majority of multinational corporations
operating in India have rated the country as a better investment destination
on various parameters than China, Brazil, the UK, France, Australia and
Singapore.
India scores over China on skilled
labour force and its market growth prospects are brighter than the UK and
Singapore, according to a perception survey conducted by Federation of
Indian Chambers of Commerce & Industry (Ficci) among 135 MNCs in India.
These include Procter & Gamble, Nestle, Hyundai, Ford and Colgate Palmolive.
India is considered a better investment
destination for MNCs when compared to Brazil. Both rate of return and tax
regime in Brazil are considered major impediments by the investors when
compared to India. Interestingly, foreign investors have put India's labour
law and tax regime as better than France. The survey compared Russia, China,
Malaysia, Thailand, Brazil, Australia, UK, France and Singapore with India
on eight investment parameters. The eight criteria are policy framework
for foreign direct investment (FDI), market growth, consumer purchasing
power, rate of return, infrastructure, labour force skills, labour laws
and tax regime.
Profitability of MNCs in the Indian
soil is major attraction for investing in the country. About 62 per cent
respondents reported making profit in their Indian operations while 9 per
cent are breaking even, highlighting the result of the survey Ficci senior
vice- president YK Modi said. In the last Ficci FDI survey, only 36 per
cent MNCs were making profits, while 25 per cent were breaking even.
"India's commendable performance
on the growth front has gone unnoticed and has been rated better or at
least as good in comparison to six out of nine country analysed," Mr Modi
said.
"The most worrying factors for India
are the consumer purchasing power and the infrastructure," he said. All
nine countries including Russia, the UK and Australia have scored better
in these two parameters compared to India in investors' perception.
"Majority of foreign companies plan
expansions and perceive opportunities for higher investment provided bottlenecks
in infrastructure, legal and labour laws are removed," he added.
"The survey will be presented to
the ministries of finance and industry shortly for future action. While
Ficci will highlight good points of India as investment destination in
business shows abroad, it will persuade government to take immediate actions
to remove impediments," Mr Modi said.
"Overall assessment of India as
an investment destination is positive according to 40 per cent of respondents,
while 44 per cent viewed it as neutral. About 82 per cent perceive opportunities
for greater FDI," he said.
According to the survey, 78 per
cent of the companies have expansion plans for their Indian operations,
as compared to 51 per cent in the last year's survey. More than 53 per
cent of the MNCs reported 50-75 per cent capacity utilisation. Majority
of companies feel government's efforts to attract FDI are "average" to
"good". Growth prospect of Indian market was "medium" as judged by 66 per
cent MNCs while 16 per cent viewed it as "high".
