Consulting firm A T Kearney’s annual survey of FDI destinations reveals that
For the first time in the history of the Index, which began tracking the FDI intentions of global executives in 1998, emerging market countries are ranked first and second as the most attractive FDI locations in the world.
… China and India took the first and second spots across nearly all broad sector categories.
While China has held the first spot since 2002, a strong increase in investor interest in India is a more recent development. Despite India’s successful positioning as a business processing and information technology outsourcing hub, these activities often translate into Indian service sector exports via third party transactions — not FDI. Last year, Indian FDI inflows reached $5.3 billion, compared with China’s $60.6 billion. India has yet to build a critical mass in FDI, having only initiated investment-attracting reforms in 1991. China’s pro-FDI regime has been in place since 1979. India’s technology and IT-oriented economy has received fewer capital-intensive FDI flows relative to China, whose entire manufacturing base has been, in large part, established by foreign multinational companies.
“India is on the cusp of an FDI take-off. However, for India to harness manufacturing investor interest and evolve into an FDI capital-intensive hub, the government must maintain its reform orientation and overcome narrow business interests, consistently addressing the country’s infrastructure, logistics, and regulatory barriers”.
…and the actual numbers (sans 2005, which should be updated shortly)
India’s numbers are still still way behind China’s (or what the US was receiving until last year), but hey… we’re moving… fitfully, but in the right direction.