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India ranked fourth most attractive investment country

Written by: Staff
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New Delhi, Jun 7 (UNI) India has been ranked the fourth most attractive investment country in the world as well as the most preferred location for call centres and back office functions, according to the Ernst&Young European Attractiveness Survey 2006 released today.

India's rating in 2006 is at par with the previous year, with 18 per cent of investors citing it as a key choice. However, the survey -- 'Globalisation Act II: Team Europe Defends its Goals' -- says the country shows few signs of being able to compete with China as an FDI destination.

India also figured at number five among the top 10 countries for Research and Development centres. It was placed after the US/Canada, Germany, United Kingdom and France. China and US remain the top two preferred countries for international decision makers with 41 per cent votes.

Whilst remaining attractive, China's pull has considerably reduced since the European Attractiveness Survey 2005 (52 per cent).

While SMEs are most attracted by China (46 per cent), there has been a decline in the level of interest expressed by multinational corporations -- 38 per cent, compared with 58 per cent a year earlier.

While China achieves the lead position for manufacturing operations with 18 per cent votes, India has emerged the top country for call centers with 14 per cent. However, the survey findings indicate a 8 per cent fall in India's attractiveness for call centre functions. Germany, US/Canada follow India with an 11 per cent share.

The results of Ernst&Young's 2006 Attractiveness Survey reflects the maturing of the location decision-making process, and analysis of the criteria used by senior executives in selecting locations for investment projects reveals that their decisions can be divided into three categories -- Operations, Finance and Business Environment.

The survey indicated that ranking of location criteria by multinationals and SMEs not only reflects the complexity in making these decisions, but also the leading role of ''quality'' or ''soft'' factors over direct ''bottom line" factors. This somewhat contradicts the conventional perception that all location or relocation issues are based solely on cost and tax factors.

The quality of the infrastructure, proximity to markets and the quality of the workforce were rated by corporate executives as ''very important'' in assessing a potential location.

Elements like potential gains in productivity, tax burdens, costs of labour, public aid and the proximity of financial markets, that directly affect the cost structure of a potential investment, though essential were ranked second in international executives' minds.

Business environment, which reflect the location's opportunities and threats, has gained importance. The availability of specific expertise in the region, innovation and research, and the quality of life are now considered much more critical than earlier.

Ernst&Young operates from 7 cities in India with a work force of over 2400 people. Global Tax Advisory Services, Risk and Business Solutions and Transaction Advisory Services are the core services offered by the firm.

UNI RA PV BD1714

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