Davos 2025: India fifth preferred investment destination among global CEOs due to regulatory complexity, PwC execs say

PwC global chairman Mohamed Kande (L) and PwC India chairman Sanjeev Krishan.

India is the fifth most preferred investment destination among global CEOs due to “regulatory complexity”, top PwC executives said at the World Economic Forum (WEF) in Davos.

The executives were speaking to Moneycontrol on January 20 the sidelines of the launch of the PwC 2025 Global CEO Survey, an annual fixture at WEF. The survey said nearly three in five CEOs are optimistic about the global economic outlook and they expect global growth to increase over the next 12 months.

"We interviewed more than 4,000 CEOs...We believe that when CEOs see the level of investment being made on innovation in industries such as technology, artificial intelligence (AI), energy transition, and renewable energy... there is always something good happening, new value will be created and they all want to be part of that value creation" PwC global chairman Mohamed Kande told Moneycontrol.

Indian CEOs are optimistic about their prospects in 2025, buoyed by expectations of higher global economic growth this year.

PwC India chairman Sanjeev Krishan said some part of the optimism stems from Indian CEOs' assessment of a higher global growth this year.

"Last time it was 20 percent, this time it is 46 percent. So, Indian CEOs are expecting that the global growth will be much better in 2025 and as a result, they are optimistic about India's opportunity because at this point in time, India is very linked to the global economy," Krishan said.

He also pointed to various investments in the new-age sectors. "The amount of investments that India is making on hydrogen, solar, wind, etc. I think that is going to put India on the roadmap to green the country.

“In terms of semiconductors, two big OSAT (outsourced semiconductor assembly and test) plants are coming along at this point in time. These are going to spur follow-on investments that are going to happen because it's not about these industries only, it is also about the ecosystem that needs to get created" Krishan said.

Despite all the tailwinds, global CEOs still see the United States, the United Kingdom, Germany and China as better investment opportunities than India, he said.

He pointed to three main reasons.

The first, a certain amount of regulatory complexity. "We have a federal structure, but the states, possibly where the last-mile approvals happen, at times there are delays and maybe we could do a little bit better. They need to possibly be a little bit more in sync with the Centre in some ways," Krishan said.

The second is infrastructure. "We have made significant improvements and are much more competitive on the manufacturing side as well. But in terms of logistics costs, I think there is still some work for Indian manufacturing to not just manufacture for India, but for the globe" he said. Countries such as Malaysia and Indonesia are doing better in areas such as logistics cost, maritime efficiency and digital effectiveness among others, the PwC India chairman said.

Hyperskilling is the third challenge Krishan pointed to, saying it will require significant investment. Some of the surveyed Indian CEOs cited a shortage of skilled labour in their factories, while many others stressed on the need to re-skill tech workers to stay at the cutting edge of AI and other emerging technologies, including what's happening in the Indian global capability centres (GCCs), he said.

In its survey, PwC said 42 percent of the CEOs expect to increase headcount by 5 percent or more over the next 12 months.

The percentage is highest (48 percent) among smaller companies (less than $100 million) and those in the technology (61 percent), real estate (61 percent), private equity (52 percent) and pharma and life sciences (51 percent) sectors.

More CEOs also said GenAI increased headcount rather than decreasing it, easing concerns about job losses.

Kande said new jobs and job categories will be created, as every company that wants to adopt AI will need people who understand it.

"The companies that use AI to become more productive get a better return on investment. The better return on investment helps them grow the company. When they grow the company, they have more capital. And what do they do? They invest, grow the company and hire more people," he said.

Therefore, while some jobs may experience slower recruitment, the key question to be asked is how many net new jobs AI will create, Kande said.