Red-taped India favourite investment hub

New Delhi, Sep 2: Despite the bottlenecks of bureaucracy and weak intellectual property (IP) protection laws, India continues to remain the favourite destination for investment by global multinational companies.

''Though China leads the Foreign Direct Investment (FDI) inflows list, India has received more high-quality projects,'' FDI magazine editor Courtney Fingar said.

FDI is a monthly publication of the leading London daily, Financial Times.

The foreign inflows are often determined by macro factors like the political environment and socio-cultural setup. ''The whole SEZ issue received a lot of international review and though it might influence the short-term plans of investors, it will not affect the decision of multinationals, though it might get delayed,'' said Ms Fingar.

Also the weak IP proection laws pose hindrance to companies especially pharmaceuticals. ''The companies fear an infringement of technology that is their own and that becomes a problem.'' Red-tapism along with the required multiple approvals also make investment in India a nightmare. ''If there could be a single-window approval, it would do wonders for the country,'' said Ms Fingar.

With a booming real estate and infrastructure sector, India is poised for further growth. ''The opportunities are abundant especially in sectors like infrastructure but even Food and Beverages along with the telecom sector will play a major role,'' she said.

India is expected to become the preferred choice for manufacturing telecom equipments after China, she added.

Comparisons are always on between the two south Asian giants, but it should be noted that both have had very different liberalisation processes, said Ms Fingar.

Another promising sector that is emerging is the small car segment with major auto companies setting base here. ''The country will become a manufacturing hub as most companies see India as an important point for export in the Asian region,'' she said.

The retail sector along with the services segment will continue to grow, she added.

Talking about the SEZs, she said the issue was a double-edged sword. ''But, when a country shows eagerness to set up such zons, it presents a keenness to invite overseas investment.'' India has also become a strong contender for overseas acquistions. ''Deals like Tata-Corus show that India is serious when it comes to business and countries like the UK are now viewing the propositions in a new light,'' Ms Fingar said.

Cambodia, Laos and Malaysia are few other destinations that would appear on the investor's list in a few years.

The US had also launched an 'Invest in America' initiative in May this year after its FDI inflows reduced. ''This shows how important FDI is along with organic growth,'' she said.

FDI equity flows stood at 15.7 billion in 2006-07 from 5.5 billion dollars in 2005-06, representing a growth rate of 184 per cent. With this, the cumulative FDI inflows in to the country since 1991 touched 54.6 billion dollars.

The Indian government seeks to double the FDI inflow to 30 billion dollars this fiscal in order to maintain a growth rate of nine per cent per annum over the next five years.

UNI