New Delhi, July 11 (IANS) India may still be an important investment destination for global companies but its complex tax structure, difficulty in repatriation of cash from investments and corruption issues are becoming key challenges for investors, according to a survey released Monday by global advisory firm Ernst & Young (E&Y).

In its study - What lies Beneath? - E&Y said that chief financial officers (CFOs) were underestimating the costs and time involved in entering rapid growth markets like India. The study involved in-depth interviews with 921 CFOs from 59 countries, both developed and rapid-growth markets.

Over a third (36 percent) of CFOs considered that overall costs were higher than expected in entering rapid growth markets; while 43 percent said the investment took more time than anticipated, said the report.

Higher than expected operational costs were a concern for 36 percent of the respondent CFOs with research and development being the most likely area to seek overspends.

Costs involved with getting the right people for the job also were spiralling as demand for talent outstripped supply.

"CFOs are also overspending on integration and harmonisation of reporting frameworks to meet global reporting standards. It is interesting to notice that wherein developed countries the focus of the CFO is cost reduction, in India, the challenge is how to manage growth that might be in excess of 20 percent a year," said E&Y.

Repatriation of cash from investments emerged as one of the key areas of concern for companies investing in India. The advisory firm said this may be because surging capital flows were stoking inflation and impacting exchange rate exposure.

In addition, multiples in India get really high on the back of expected growth for a long period into the future leading to danger of overpaying for assets.

Another concern were the slew of bribery and corruption scandals that have affected India's image in the global investor community.

"In the area of political cost, management of risks and exposure to bribery and corruption is the leading reason for unanticipated expense. The regulatory environment in India is going through a major transformation, investors need to anticipate them and make sure they build these costs into their investment rationale," said the E&Y study.

"CFOs interviewed very clearly advised that a 'zero tolerance approach' is the key."