Despite India becoming a new destination for global investors, 38 per cent of over 5,400 companies' representatives surveyed by the global consultancy firm PricewaterhouseCoopers said they were asked to pay bribes to get licences, orders over the past two years.
Among the seven major emerging economies of the world, India is ahead of Turkey, Mexico and China, where 28, 28 and 21 per cent of firms in that order reported experience with bribery, the PwC 2007 Global Economic Crime Survey released said.
"The Indian companies and government should be concerned about the perception of global firms regarding corrupt environment in India as it would affect the flow of foreign investment and cost of raising funds by India Inc," the firm's advisory leader Ashwani Puri said while releasing the survey.
Russia, Indonesia and Brazil were, however, ahead of India in terms of corporate corruption, where about half of the surveyed firms reported they had been asked to pay bribes.
Of those firms which had to contend with bribery in India, 66 per cent said they lost the opportunity to their competitors because of this factor.
The survey also noted that one-third of the Indian companies surveyed have been victims of economic frauds like asset misappropriation, bribery, accounting frauds and infringement of intellectual property rights in the past two years.
There is a significant decrease in such incidents since the 2005 survey when 54 per cent of the Indian organisations reported suffering from economic crime, but it may be attributed more to higher tolerance for fraud and reluctance to
report frauds due to bad media publicity, Puri said.
The biennial survey, which covered 152 entities in India and over 5400 globally, stated that on an average, companies incurred financial loss of Rs 6 crore (Rs 60 million) in economic fraud during the period. In addition, they had to spend over Rs 4 crore (Rs 40 million) on an average to manage the damages of economic fraud, said Puri.
"According to survey, the typical perpetrator of economic fraud in India is male, between the 31-40 years of age with a graduate degree and employed in the same position or role for at least five years," PwC Associate Director Sumit Makhija said.
The survey pointed out that 89 per cent of respondents, which included CEOs, CFOs and HR managers of global firms, said lack of faith in Indian legal system and corruption were major factors which led to the failure in checking economic frauds.
Of those reporting fraud, 92 per cent said the fraud had damaged their brand and 88 per cent said it impacted staff morale. 84 per cent said it had harmed their relations with other external parties and 75 per cent said it had strained
their relations with regulators.