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After a hiatus in 2022, India has rejoined Kearney’s foreign direct investment (FDI) confidence index list in the 16th position, signalling a renewed interest from foreign investors in the Indian markets.

Developed markets such as the US, Canada, and Japan, among others, took 19 of the top 25 spots on the index, Kearney’s report showed.

Among the emerging markets, India secured the second position, surpassing the UAE, Qatar, and Saudi Arabia, and standing just below China and Hong Kong.

Kearney says that even as the global economic sentiment is somewhat in the doldrums, business leaders are showing signs of optimism. Of the ones polled by the research firm, 82% said they were planning to increase their FDI over the next three years.

The importance of FDI to corporate profitability and competitiveness has also increased among business leaders, with 87% expressing their regard for it, compared to 83% in the previous year.

Signals such as slowing global inflation, rebalancing of labour markets in key economies, and China’s abandonment of its zero-COVID policy have been encouraging to investors, Kearney said, adding “cautious optimism” would be the best way to describe sentiment when it comes to foreign direct investments, at the moment.

Developed economies such as the US, Canada, Japan, France, and Singapore took the top five spots on Kearney’s FDI confidence index.

Investors’ reluctance to invest in emerging markets mainly stemmed from prevalent political instability, stringent regulatory frameworks, paucity of skilled labour, and inadequate infrastructure quality, and most saw these are likely risks.

Still, the addition of Asian countries such as Thailand and India to the index signals investors’ increasing bullishness on Asia’s economic prospects, the report said.

“The picture emerging from this year’s FDI consumer index gives reason for both promise and concern in the global economic and investment outlook, highlighting the need for strategic businesses to plan for turbulent and potentially unexpected shifts in globalisation,” the report said.