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'India to be largest recipient of investments in manufacturing'
By siliconindia
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Saturday, 21 June 2008, 01:50 IST
Bangalore: India is likely to see the largest growth in its share of foreign investment, and become the world leader for investment in manufacturing, according to a survey by KPMG, a global network of professional firms providing audit, tax, and advisory services.
"As investments go global, the smart money is increasingly finding its way from the traditional investment destinations of US & Europe to the BRIC countries. The more recently recognized opportunity in India is reflected in the fact that a significant amount of investment into the country in the next five years is expected from first time investors. The expected increase of Indian investment in the Middle East reflects the proximity and the opportunity created from the oil price led wealth effect. India must continue to build on its investment climate to monetize this sentiment." said Russell Parera, CEO, KPMG in India.
The results showed a move away from investments in the U.S., Japan, Singapore and the UAE, and a big increase in flows to Brazil, Russia, China and India (BRIC).
Commenting on the findings of the survey, Sudhir Kapadia, Head of Tax and Regulatory Services, KPMG in India, said "This trend-setting KPMG survey validates anecdotal evidence suggesting a major shift of capital flows from the U.S., Japan and other European countries to the BRIC countries, in the next 5 years. It is significant to note while 10 percent of the companies surveyed expect to invest in India currently that number will go up to 18 percent in five years-the biggest gain amongst all other BRIC countries. Further an increasing proportion of investments will flow into industrial products and manufacturing in India. Interestingly 64 percent of the investment into India is expected to come from new entrants to the country."
This conclusion emerged when corporate investment strategists from over 300 of the largest multinational companies in 15 major economies were asked where they plan to invest in the next 12 months and in five years' time.
They were also asked which countries they saw as dominant in their sector today, and which they expected to be dominant in 2013/14.
China is expected to overtake the U.S. as the world�s leading recipient of corporate investment in the next five years, and should become the most influential country in IT and telecoms, industrial products and mining, a new study of future global capital flows has found. But the European economies are expected to keep their attraction for investors, with the U.K. maintaining a very strong position, especially in financial services.
China should receive significant investments from 24 percent of corporates surveyed in 2013/14, up from 17 percent this year. Russia can expect investments from 19 percent in five years, up from 12 percent this year, and Brazil can expect investments from 14 percent, up from 10 percent during the same period.
By contrast, the U.S. share of investments is expected to fall by 4 percent to 23 percent, still a very high proportion of global investment, but placing it marginally behind China. The U.S. is also expected to give up its dominance of the mining, industrial products and IT/telecoms sectors, with China taking first place in each case.