New Delhi, July 18: India stands at the number six position of the latest FDI Confidence Index of the management consultancy firm, AT Kearney. The index, however, rates the attractiveness of a country for the foreign direct investment which is different from the actual flow of FDI.The June report of AT Kearney has put India at the number six slot, up by one notch from the December 1998 FDI Confidence Index. But it must be noted that, with about $3.3 billion FDI in 1997, India was behind more than two dozen countries as far as actual FDI was concerned.The US, China, the UK, Brazil and Mexico are ahead of India in the FDI Confidence Index.AT Kearney probes CEOs and other top decision maker of the world's top 1,000 companies twice a year about their foreign investment plans over the next three years. The FDI Confidence is the result of responses of participating firmswhich, according to AT Kearney, cover 60 countries receiving 90 per cent of global FDI flows. According to AT Kearney, the large gapbetween India's attractiveness and actual FDI flows it receives is due to the fact that CEOs in top companies appreciate the potential of the Indian economy. But what deters them in taking the plunge are the factors like political uncertainty, a rigid and often unpredictable investment environment, poor infrastructure, slow pace of reforms and problems with the recent foreign ventures."The lack of regulatory mechanism is a big problem," Arindam Bhattacharya, principal with AT Kearney said. "The long time lag involved in getting permissions also deters investors." Another factor impeding FDI is the predilection of politicians to play Big Brother, Bhattacharya said. "The powers that be still have a socialist mindset."Besides, foreign companies are seen as bad, predatory, he said. In such a milieu, MNCs feel that they are tolerated rather than solicited.According to survey, MNC cross-border investment is likely to remain high. About 75 per cent of the corporate executives surveyed plan to maintain, orslightly increase, their investments abroad as compared to six months ago. Telecom and utilities firms reported a strong upswing in FDI intentions since December 1998.Corporate executives found global economic conditions as more stable today than six months ago. Confidence also seems to be returning to emerging markets, though developed countries will continue to receive the lion's share.Though there is a significant relationship between GDP and FDI Confidence Index, when firms invest in emerging markets GDP is not the only decisive factor.
