India economy news: Global businesses confident about investing in India, 44% business planning investments: Deloitte

Even as the Indian economy grapples with Covid-19 pandemic, global investors seem to be upbeat about investing in the country, a Deloitte global survey said.

About 44% of the 1,200 business leaders surveyed globally are planning additional or first-time investments in India, the Deloitte survey –India’s FDI Opportunity – a global survey of multinational business leaders to gauge their perceptions of India said.

“Nearly two-thirds of first-time investments will be made within the next two years and business perceptions of India are better in the US and UK compared to Singapore and Japan,” the Deloitte survey said.

The survey, conducted during the peak of the second wave of the Covid-19 pandemic in India this year, found that a large proportion of international business leaders remain confident in India’s short- and long-term prospects and are readying plans to make additional and first-time investments in the country.

An accompanying Deloitte analysis shows that India will need US$8 trillion of gross capital formation (new greenfield assets) to become a US$5 trillion economy by FY2027. Based on past trends, India will need at least US$400 billion, cumulatively, over six to eight years, in FDI, the report said.

“After the challenges of the past 18 months, the Deloitte survey is a positive validation of the underlying strengths of the Indian economy, in particular its appeal for foreign investors. We believe the outlook can only get better because of India’s improving ease of business, which includes fiscal benefits and other reforms. These positive steps further convince me that India is moving towards its ambition of a US$ 5 trillion economy,” said Punit Renjen, Deloitte Global CEO.

As per the survey amongst first time investors, nearly two-thirds are planning investments in India within the next two years. When asked to identify sectors most likely to see new investments in India, utilities (energy infrastructure) led the way (57 percent), reflecting India’s plans to significantly grow its renewables capacity, while financial services (49 percent) and healthcare (48 per cent) also ranked highly.

“Directing FDI into capital-intensive sectors should be the focus as it is key to the country’s gross capital formation as well as establishing its position as a global trade partner. While global organisations look for alternative destinations to manufacture and India is well-positioned to capture a disproportionate share of the shift, the country must continue to enact reforms and initiatives that drive improvement, building confidence in and competitiveness of India’s economy,” said N. Venkatram, CEO, Deloitte India.