Already lagging far behind its BRICS peers in growth, India has now slipped to 71st position, down by 11 places, in an annual global competitiveness list.
The annual list, released today by the Geneva-based World Economic Forum (WEF), comes at a time when a new Indian government is struggling to fulfil its promises of rapid economic growth.
"Continuing its downward trend and losing 11 places, India ranks 71st. The country's new government faces the challenge of improving competitiveness and reviving the economy, which is growing at half the rate of 2010," WEF said.
The list was topped by Switzerland – incidentally the home country of the WEF. In its Global Competitiveness Report 2014-15, Switzerland is followed by Singapore.
Other countries in the top ten are Finland (4), Germany (5), Japan (6), Hong Kong SAR (7), Netherlands (8), United Kingdom (9) and Sweden (10).
China, which has improved its position by one place to 28th spot, leads the BRICS grouping. Russia is ranked at 53rd position, followed by South Africa (56) and Brazil (57).
"India's decline of 11 places to 71st, set against the gains of the ASEAN 5 countries, suggests that the competitiveness divide South and Southeast Asia is becoming more pronounced," WEF noted.
Besides India, WEF said that some of the world's largest emerging economies continue to face difficulties in improving competitiveness. These include Saudi Arabia (24th rank), Turkey (45), Mexico (61), Nigeria (127th), South Africa and Brazil, all of which have slipped in their rankings.
The rankings are based on WEF's GCI which is based on scores covering 12 categories.
These are institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.
According to the report, India's slide in the competitiveness rankings began in 2009, when its economy was still growing at 8.5 per cent (it even grew by 10.3 per cent in 2010).
"Back then, however, India's showing in the Global Competitiveness Index (GCI) was already casting doubt about the sustainability of this growth.
"Since then, the country has been struggling to achieve growth of 5 per cent. The country has declined in most areas assessed by the GCI since 2007, most strikingly in institutions, business sophistication, financial market development, and goods market efficiency," it said.
The report said improving competitiveness would yield huge benefits for India, help re-balance the economy and move the country up the value chain, ensuring more solid and stable growth.
"This in turn could result in more employment opportunities for the country's rapidly growing population," it added.
WEF further said that India needs to create a sound and stable institutional framework for local and foreign investors as well as improve connectivity.
"The strained global geopolitical situation, the rise of income inequality, and the potential tightening of the financial conditions could put the still tentative recovery at risk and call for structural reforms to ensure more sustainable and inclusive growth," WEF founder and executive chairman Klaus Schwab said.
According to the report, there is uneven implementation of structural reforms across different regions and levels of development, and this is the biggest challenge to sustaining global growth.
Talent and innovation are the two areas where leaders in the public and private sectors need to collaborate more effectively in order to achieve sustainable and inclusive economic development, it added.
"The leading economies in the index all possess a track record in developing, accessing and utilising available talent, as well as in making investments that boost innovation.
"These smart and targeted investments have been possible thanks to a coordinated approach based on strong collaboration between the public and private sectors," the report said.