New Delhi, June 6 (IANS) Foreign direct investment (FDI) is set to increase in India in the coming years as, despite some regulatory issues, low business cost coupled with high economic growth appeal to investors across the globe, an Ernst & Young's survey released Monday said.

Though investor enthusiasm for India declined in 2010, causing the value of FDI to fall by 31.5 percent, still India's perceived specialisation as a low-cost business process outsourcing hub continues to appeal to the investors across the globe, Ernst & Young's ninth Annual European Attractiveness survey said.

According to the survey conducted on 812 business decision-makers across the globe, India is the fifth most attractive country for expanding business.

In the next three years, the most attractive country for expanding business would be West Europe with 31 percent affirmations followed by China with 31 percent support.

"India ranked at fifth position with 17 percent of respondents believing the country to be a profitable economy for expansion of business," it said.

"The survey clearly establishes India as one of the leading economies where foreign capital will flow into in the coming years. In addition to the overall strong macro-economic fundamentals, India's navigation of the economic downturn over the last couple of years has been strong and steady," Srinivasa Rao, partner and national director of tax and regulatory services at Ernst & Young, said in a statement.

The survey also throws light on the cities across the globe that have the best chance of producing the next IT giants like Microsoft or Google in the coming years.

It said Mumbai and New Delhi have the potential to produce firms like Microsoft and Google.

"While Shanghai topped the chart with 14 percent affirmation, 8 percent of respondents named Mumbai and 4 percent named New Delhi as promising cities," it said.