Although far behind China, India figures among the ten most attractive destinations for foreign investment, according to a new survey.

India jumps to sixth place from 15th last year, said a survey by leading global consulting firm A T Kearney Inc.

Other surprises in this year's survey, besides India, has Poland, Russia and Brazil replacing France, Italy, Canada and Australia in the top ten.

During the survey, more than a fifth of all global executives said their outlook on India had improved over the last year.

India's English-speaking population too is highly valued by American, Canadian and British investors. Overall, European and Asian executives view India more favourably this year.

"Of the global investors committing FDI to new markets, one in ten will enter the Indian market over the next three years," AT Kearney said.

Besides, India is a prime offshore location for low and high-tech activities, its low-cost, English-speaking and IT-savvy labour force, coupled with a large market potential, underpin global executives' improved outlook and investment confidence this year.

AT Kearney said manufacturing investors rank India among the top six most preferred investment locations and nearly a third are more optimistic on the Indian market.

Services sector investors ranked India as the fourth most attractive this year, up from the 14th place in 2002, it said adding as a leading offshore location India received investments from GE Capital, American Express, Citibank, Conseco, British Airways, Dell Computers and Reuters.

This FDI resulted in the development of call centres, back office support and facilities to handle knowledge-intensive activities.

However, FDI remains significantly lower than China and Brazil, it noted. Investors still face a highly bureaucratic business climate as well as ceilings on foreign ownership in India.

"As a result, many firms simply outsource by hiring Indian firms to manage business processes without making direct investments," AT Kearney said.

Recent delays in tax reform, protests against privatisation of state-owned industries and the slowdown in privatisation could limit India's ability to transform offshore attraction into significantly larger FDI inflows.

But China remains way ahead, outsmarting even the US for the second year in a row. Beijing is expected to attract $57 billion in foreign investment this year against $52.7 billion in 2002.

Because of the rush to China, Asia is likely to overtake Europe as an investment destination for the first time the survey said, pointing out that Thailand, South Korea and Vietnam all moved up in Kearney's rankings this year.

The survey, says The Wall Street Journal, has emerged as an indicator of the countries the world's biggest companies feel confident about for making cross-border investments.

China's huge investment inflows come at a sensitive time for its relations with its biggest trade partners. The United States, Japan and Europe are pressuring Beijing to abandon its fixed exchange rate, which keeps the price of Chinese products too low for the comfort of manufacturers in developed countries, and adopt a free floating rate.

However, some analysts say that the cure is worse than the disease.

They say that a free-floating yuan may expose weaknesses in the Chinese financial system that could send the currency tumbling, says the Journal.

US Treasury Secretary John Snow told Chinese officials earlier this month on a visit to China that the best system for it is 'one based on the principle of free trade, open markets, free capital flows and market-based exchange rates.'

Weijian Shan, a partner in Hong Kong for the US private equity firm Newbridge Capital, is among those happy that the Chinese ignored Snow's advice.

"You would see a massive outflow of capital, under full liberalisation of the Yuan-trading regime," he said.