India and China preferred FDI destinations: E&Y

An investor walks past the stock price monitor at a private securities company in Shanghai. According to the study, China edged past Western Europe as the most attractive foreign direct investment destination for this year.

Riding on the back of robust economic growth and thriving economies, India and China have emerged as the preferred investment destinations even as Europe has taken a hit, according to a study by leading global consultancy firm Ernst & Young.

According to a survey by the firm titled ‘European attractiveness survey', China with 39 per cent edged past Western Europe with 38 per cent as the most attractive foreign direct investment (FDI) destination for this year.

These two FDI destinations are followed by Central and Eastern Europe with 24 per cent at third place, while India shares the fourth position with North America at 22 per cent each, the survey of 814 leading global investors showed.

According to E&Y, there is a clear shift in the world's economic weight Eastwards, as it ranked China (66 per cent), India (61 per cent) and Central & Eastern Europe (59 per cent) as the most attractive regions for FDI projects in the next three years.

Western Europe, which currently ranks as the second-most popular destination for FDI, is expected to fall to the fifth place behind Brazil. “For the next three years, investors continue to see China, India and Central and Eastern European (CEE) nations as their route to future riches,” the report said.

The report stated that in the improved economic scenario, investors have resumed their hunt for higher returns, leading to global FDI competition.

This has resulted in levelling of the playing field, the report said. Both East and West Europe have been hit badly by the economic crisis, which has raised doubts about the region continuing to play a leading role in a multi-polar world if it is unable to attract new investments, the report added.