Ease of Doing Business ranking 2018: What foreign investors want, and why India is in a win-win situation

The Narendra Modi government is confident that India has improved ease of doing business for foreign investors, and says that it has taken over “7,000” big and small steps to ensure a positive climate for global investors. In the last three-and-a-half years, the government says, the country has received foreign direct investment (FDI) of above $170 billion. However, it is yet to be seen how India performs in the latest World Bank Ease of Doing Business ranking 2018 report, but here’s what foreign investors want to ensure before they put their money in any country, according to another report by the World Bank ‘Foreign Investor Perspectives and Policy Implications’.

1.  Stable government: For investors what matters the most is a stable government. A stable government ensure that whatever policy relating to business and the economy is put in place, gets implemented properly. 50% of the surveyed investors by the World Bank said that a stable government is “critically important” for them.

2. Domestic market size: Any investor looks how big the domestic market is while investing, as it may prove out to be profitable if the country where the investor is investing also provide a ready-made market for its manufactured goods and services.

3. Macroeconomic stability and favourable foreign exchange: Nearly 30% of the surveyed investors consider a country’s macroeconomic stability and a favourable foreign exchange before putting their money.

4. Legal and regulatory environment: For investors, it is very crucial that they face least of legal and regulatory hurdles while investing. For them, easier, simpler and transparent process for starting a business is important, than getting stuck in various clearances and red-tapism.

Infrastructure and labour market also play key roles in attracting foreign investors. While India’s labour market is also huge providing favourable conditions to investors, infrastructure is something, the country still needs to work on.

The country’s macroeconomic fundamentals are “strong” and the economic growth is only through temporary slowdown due to structural reforms, Finance Minister Arun Jaitley said on multiple occasions. Moreover, due to the full-majority government under the globally acknowledged leadership of Narendra Modi, and efforts to ease legal and regulatory environment, also seem to be in favour of investors. India’s huge domestic market is also a big factor for investors to invest in India.