India has overtaken China as the most attractive investment destination, according to Ernst & Young (EY), with the sharp depreciation in the rupee and opening up of new sectors to foreign players boosting the South Asian nation's allure.
Companies are most likely to invest in India, followed by Brazil (2), China (3), Canada (4) and the United States (5), EY's ninth bi-annual Capital Confidence Barometer - a survey of 1,600 senior executives across more than 70 countries - showed. In the eight edition of the survey, published in May, China had the top spot, followed by India and Brazil.
"The investor outlook for India remains positive, despite the challenges the country's economy has faced in the recent past," said Amit Khandelwal, national leader & partner, Transaction Advisory Services at EY.
"At the same time, the improved condition of the world economy has helped increase confidence amongst deal makers, prompting them to take a bolder stance toward executing transactions...the Fed's [Federal Reserve] reassurance on not pulling back stimulus in the near term has boosted confidence in the board rooms," Khandelwal said.
Over the past year, India has ramped up efforts to attract overseas capital, relaxing foreign direct investment (FDI) across several industries including telecoms, single brand retail and oil and gas.
In addition, with macroeconomic pressures and large debt piles, several Indian companies are looking to divest their non-core businesses, creating a large opportunity for foreign investors striving for a greater role in the Indian market.
(Read more: Is China turning on foreign companies?)