India :Most Favorable Destination For Foreign Investments

India is the second fastest growing major economy in the world ,when measured in terms of USD exchange rate, is the twelfth largest economy in the world, with a GDP of US $1.25 trillion (2008) and the third largest in Asia behind Japan and China--with total GDP of around $797 billion.Indian GDP rose by around 8% from 2002 to 2006 and 9.4% in 2007. It is the third largest in terms of purchasing power parity. India has been considered as most favorable destination as far as foreign investments are concerned because of more visibility, lower costs and access funds available for investment.

India has been ranked 64th in a global list of best countries to do business as against 51st place last year.A recent survey conducted by the Japan Bank for International Cooperation (JBIC) shows that India has become the most-favored destination for long-term Japanese investment. Survey Indicates nearly 70% of Japanese manufacturers regard India as the most attractive country to do business over the next 10 years
During 2007, Indian firm Anchor Electrical was sold out to Osaka-based Matsushita while Lumax industries were acquired by Japan’s Stanley Electric world leader in illumination products. In 2006, the Poonawala Group sold its stake in Eagle Seals and Systems to Japan’s Eagle Industry. The automobile sector has been the area where the Japanese presence is the most noticeable in addition to the sectors like machine tools, electronics and IT. Finance sector also seems to be one of the attractive sectors being explored by Japanese companies. While Shinsei Bank has set up its investment arm in India, Nomura Holdings, Japan’s largest securities firm, has already expressed its intent to venture into Indian markets. According to India Brand Equity Foundation, Japan ranks fifth in terms of cumulative FDI equity inflow into India. Japan’s FDI in India is projected to be around $5.5 billion over 5 years from 2006 to 2010.

According to a data released by U.S. Commerce Department its Cumulative investment in the Asia-Pacific region increased by $48.5 billion to $453.9 billion in the year 2007.Investments in the rising economic giant surged 48 percent to $13.6 billion in 2007 from a year earlier while its Investments in Asia’s giant china witnessed a surge of 21 percent to $28.2 billion. However, In Thailand US Investments soared 37 percent to $14.9 billion largely because of investments in petroleum refining, banking and mining while investments in Malaysia jumped 25 percent to $15.5 billion.

Indian investment environment is considered better than rest of the countries due to availability of trained investment professionals, establishment of legal and financial system, and internationalization of service industries.This provides a favorable investment eco-system for foreign investors. India established 23 stock exchange markets and formed a multi-layer capital market system.