India Down To 7th Position On FDI Confidence Index

India has slipped to the seventh spot in the foreign direct investment (FDI) confidence index, its lowest position in more than a decade, while the US bagged the top spot, a study revealed. India ranked second for three years, in 2005, 2007 and 2012, and also grabbed the third spot in 2010.

India attracted $25.5 billion FDI in 2012, down from $31.6 billion in 2011, according to 2014 AT Kearney Foreign Direct Investment Confidence Index. This is the lowest ranking for India since 2001. The US climbed to the top position last year, displacing China, as it made progress towards sustainable and steady economic growth.

“The cooling-off in investor sentiment we foresaw last year appears to have taken shape, with a two-place drop from 5th to 7th – its lowest rank since 2001,” the report said.

In 2013, the UPA government raised limits on FDI in telecommunications, asset reconstruction, credit information, aviation and defence production, the report said, adding that foreign investment in oil refining and single-brand retail, currently capped at 49%, will now be granted automatic approval.

“In a long-awaited decision reached in late 2012, the Indian government permitted partial foreign ownership of supermarkets and department stores, a major step for the country’s highly underdeveloped retail market,” it said.

“Until late 2013, however, no foreign companies moved to enter, daunted by complex requirements, including one for 30% content from small and medium-sized Indian enterprises,” the report added.

“In December 2013, though, Tesco, Britain’s biggest retailer, announced that it was seeking permission to take 50% stake worth $110 million in Trent Hypermarket, an arm of Tata. This move came soon after Walmart ended its wholesale joint venture with the country’s conglomerate Bharti to operate 20 stores in India, citing the local product requirement as the critical stumbling block,” the report said.