India has been ranked as the 4th most preferred country for investment, expansion and business opportunity by Chief Financial Officers (CFO) from 14 countries. The results are a part of a study titled Ambition Survey 2012 conducted by BDO International, the world’s 5th largest accounting network.
BDO International went to 1,050 CFOs of companies with revenues in the range of $50 million to $2 billion and have international offices outside their headquartered country. CFOs from 14 countries across industry sectors including Retail, Finance, Tourism, Technology, Hospitality, Manufacturing, Natural Resources, Media and Telecom were interviewed. The CFOs were quizzed on various aspects of business including opportunities, challenges and risks of investing in overseas markets.
India was ranked as the 4th most preferred investment destination in the world while China and US maintained 1st and 2nd rank respectively. Brazil moved up from 6th place last year to 3rd place while Germany fell from 3rd to 5th place in 2012.
India was ranked ahead of key economies including Russia, UK, Germany, Australia, Singapore and Argentina. "The findings indicate that the BRICs are now perceived as established – rather than emerging – investment markets. India is seen as a focus for general expansion," said a press release.
On an overall basis nearly 40% of the CFOs were planning to enter the Indian market in the next 12 months alone.
24% were planning to increase their company’s investment in India and 6% wanted to keep their investment levels same. Not a single CFO planned to pull out their company’s investment in India. Saudi Arabia, UK, France, Netherlands and China are economies that are set to drive investments into the Indian market.
According to the CFOs interviewed in the Ambition Survey 2012, the primary factors making India an attractive country for foreign investment were market size, access to new customers, higher growth rates and cheap labour rates.
With a 1.2 billion population count, market size was the key opportunity factor pushing India to the forefront in the list of countries that were top investment destinations globally. From an industry perspective, Technology, Media and Telecom were seen as the sectors driving India’s appeal as an economy to invest into.
"They have a massive population, rising middle class wealth, relatively stable government, and a highly educated and literate workforce" said a CFO from UK in relation to the Indian market.
Management and staffing, corruption and ethics, cultural barriers and bureaucracy were cited by CFOs as some of the top risks associated with investing and doing business in India. Bureaucratic hurdles such as getting permits and clearances were also noted as some of the top barriers faced by businesses in India according to World Bank’s Doing Business Report 2013.
Indian CFOs were not necessarily as optimistic about investing into foreign markets as CFOs of foreign companies were about investing in India. Nearly 34% of Indian CFOs thought that fluctuation in currency was the ‘biggest risk’ their companies faced while expanding into international markets.
Against the US Dollar, the Indian Rupee has depreciated from being in the mid forties in August last year to the mid fifties at current levels. Global economic slowdown and unrest in foreign economies were other factors posing as challenges or risks for Indian CFOs wanting to invest or expand abroad.