The global survey of leading consultancy firm Ernst and Young (EY) has ranked India as the most attractive investment destination followed by Brazil and China at second and third positions, respectively.
While Canada has cornered fourth spot, the US is placed at fifth position. Other nations in the top ten are South Africa (6), Vietnam (7), Myanmar (8), Mexico (9) and Indonesia (10).
"With sharp currency depreciation and opening up of FDI in various sectors, India has become an attractive destination for foreign investors," EY, earlier known as Ernst & Young, said.
In August, the government announced relaxation in Foreign Direct Investment (FDI) norms in many sectors, including multi-brand retail and telecom.
According to the global consultancy firm, due to the present macro-economic pressures and heavy debt pile, several Indian companies are looking to divest non-core businesses.
"This has created a large opportunity for foreign players vying for a greater role in the Indian market," it added.
When it comes to investments, the US, France and Japan have emerged as "top three investors likely to invest in India".
The findings are a part of EY's latest Capital Confidence Barometer report, based on a survey of about 1,600 senior executives from large companies across 70 countries. It aims to gauge corporate confidence in the economic outlook and understand boardroom priorities, among others.
With respect to India, sectors with the highest level of anticipated deal-making include automotive, technology, life sciences and consumer products.
About 38 per cent of the respondents felt that M&A volumes in India are expected to improve over the next 12 months.
"Indian companies also reflect a concerted focus on job creation as well as optimising operations to deliver cost reduction," the report said.
Amit Khandelwal, who is National Leader & Partner (Transaction Advisory Services) at EY, said the investor outlook for India remains positive, despite the challenges the country's economy has faced in the recent past.
On the other hand, the report said that Indian corporate entities have started looking at developed markets for making acquisitions.
"After two years, European countries (UK and Germany) have made a comeback on the potential investment destinations list for Indian companies," it added.