India stands out as the most secure location for business in South Asia, as other countries in the region like Pakistan, Sri Lanka and Bangladesh "attract less favourable rankings".
However, infrastructural deficiencies in key hubs like Mumbai and Bangalore is a major concern for global investors, according to a study by Control Risks, a global business risk consultancy firm.
The study, RiskMap 2007, ranks both political and security risk in India as low. The country offers a secure platform for business operations, notwithstanding the threat of Kashmir-based terrorist groups and their spread to other parts of the country, the study said.
Even though the coalition politics would compromise the government's ability to deliver some of the liberalisation measures demanded by investors, the general direction of economic policy would "remain positive", it said.
However, an area of concern for many investors will be "infrastructural deficiencies in key hubs like Mumbai and Bangalore".
Commenting on the BPO sector, the report stated that it was becoming a victim of its own rapid growth as some of its fundamental country-specific advantages were eroded by the inability of urban infrastructure to keep pace.
According to Control Risks' India representative Jake Stratton, "Companies can tackle country risks. It is a question of being able to identify risks at an early stage and develop country-sensitive risk management strategies to deal with them. Indian multinationals are paying a great deal of attention to these issues as they expand their operations into volatile markets in Latin America, Africa and elsewhere".
Control Risks sees serious threats to business in countries in the South Asian region. Political and sectarian tensions in Pakistan, civil war in Sri Lanka and the struggle between Bangladesh's two main political parties, make these countries rank much below India.
On a global level, 96 out of 198 countries surveyed were ranked as being medium, high or extreme for political risk. According to Control Risks, "The US, Russia and China are all faced with important decisions in the coming year that will have a major impact on business".
Terrorism, energy concerns, transnational crime and pandemic would continue to be real concerns for businesses across the world, it said.
