India is the most attractive investment destination in the world, followed by China, in a new survey by UK's professional services and advisory firm EY of more than 500 business leaders at multinational organizations across multiple sectors such as industrial, automotive, technology and financial services. More than three out of five respondents said they had plans to invest in India over the next year and 62 percent are looking at manufacturing.  

The annual survey showed India has made major gains among investors in key areas such as macroeconomic stability (up six percentage points to 76 percent), political and social stability (up 15 percentage points to 74 percent), relaxation in FDI policy (up eight percentage point to 68 percent) and the government's efforts to ease doing business (up 10 percentage points to 67 percent). Overall, investors praised India's vast domestic market and availability of labor as its most attractive features. 

"The survey findings are a testament to India's growing appeal with the global investment community. Over the last year, the improvement in India's macroeconomic indicators, accompanied with the ongoing efforts to revitalize growth, has offered new hope to investors. It is an encouraging start and we need to build upon it further," said Rajiv Memani, EY Chairman of the Global Emerging Markets Committee and India Regional Managing Partner, in a release. 

The EY survey follows a report last month by the Financial Times  that India had received the highest foreign direct investment in the world in the first half of 2015 with $31 billion, ahead of the U.S. with $28 billion and China with $27 billion. Amitabh Kant, secretary of the Department of Industrial Policy and Promotion (DIPP) credited a new "vibrancy" in India that is driving huge gains in manufacturing. The government has identified 25 sectors where India has core competency to become the "global champion" and launched a highly "Make in India" program. According to the EY survey, 55 percent of investors had heard of the program and 69 percent of those were likely to invest in the manufacturing sector over the next five years. In the first half of 2015, the FDI capital has grown over 135 percent with a rise of 22 percent in the manufacturing sector. 

" We are determined to make India an extremely easy and simple place to do business. Our first priority is to do away with the many procedures and rules, followed by bringing in consistency and clarity in all our policies and tax regime and developing a world-class infrastructure," said Kant.  

Among specific reforms expected to drive growth, 89 percent of investors said that investment in infrastructure projects and a "100 Smart Cities" project would be significant, while both financial inclusion, including Digital India and proposed corporate tax reduction from 30 percent to 25 percent, were considered significant by 83 percent of the respondents. Implementation of Goods and Services Tax (GST) and legislation on land acquisition were also mentioned by investors as important for attracting FDI. 

"With the pro-reform government at the center, the state governments in India have also embarked on adopting policies and processes to attract investments. These include reforms in labor laws, single window clearances, online compliance and land availability, which play a very significant role in investors' choice of locations. Importantly, there is also a perceptible shift in attitude to one of welcoming investments," said Gaurav Taneja, EY India's Partner and National Leader for Government & Public Sector. 

While major cities such as Bengaluru, Mumbai, Delhi-NCR, Chennai and Pune continue to be the top destinations for overall FDI, cities Ahmedabad, Jaipur, Vadodara, Coimbatore and Visakhapatnam were ranked as the top five emerging cities for investment. Investors are showing increased enthusiasm for India's emerging cities with a 79-percent surge in FDI in 2014. 

"We are driving one- and three-year action plans across ministries so that we all work as a team to make India a manufacturing destination," said Kant. "Aided by measures taken in this year's budget, we will see India become a nation of young innovators. I believe that India will see a huge number of startups in both digital and manufacturing in the years ahead, and that India will become a nation of job creators rather than job seekers." 

(Reporting from New York City )