India’s investment promotion ‘very weak’, says World Bank

May 11th, 2009

WASHINGTON - A new World Bank group report suggests the website and inquiry handling by the Indian government’s investment-promotion agency is ‘very weak’.

The Global Investment Promotion Benchmarking 2009 report gives the rating to the Department of Industrial Policy and Promotion under India’s commerce ministry in an appendix of its consolidated results, but provides no details.

The report finds that over 70 percent of government investment-promotion intermediaries miss out on investment and job-creating opportunities by failing to provide accurate and timely information to potential investors.

The report on how effectively government agencies are promoting their countries to foreign investors examines the ability of 181 countries to influence foreign investors’ site-selection process.

It assesses the response of these agencies to two potential projects - a software developer and a beverage-manufacturing company seeking to expand operations in each country.

According to the report, only 10 out of 181 countries followed up with potential investors to secure projects.

‘If country information is hard to obtain, investors will simply go elsewhere,’ said Cecilia Sager, a manager for the World Bank Group’s Investment Climate Advisory Services.

She also noted that in the global slowdown, foreign direct investment offers prospects for growth and employment. Attracting investment, however, requires professional facilitation which, unfortunately, many countries do not provide.

The report shows that professional facilitation efforts do pay off.

The Austrian Business Agency emerged as number one worldwide, based on the report’s rankings. Middle-income countries are showing immense progress in competing for mobile investment, particularly Brazil, Botswana, Colombia, Lithuania and Turkey.

Lower-income countries like Honduras and Sri Lanka, which offer strong facilitation services, are evidence that a country’s income is not linked to performance.

The Global Investment Promotion Benchmarking 2009 report is the second in a series that covers the effectiveness of government agencies in facilitating foreign investment projects.

It uses a methodology originally piloted by the Multilateral Investment Guarantee Agency, a member of the World Bank group.