India has many challenges that it has yet to fully address, including poverty, corruption, violence and discrimination against women and girls.
India has ranked a low 97th out of 144 nations, behind Kazakhstan and Ghana, on Forbes' annual list of the best countries for business in 2015, scoring poorly on metrics like trade and monetary freedom and tackling challenges like corruption and violence.
Denmark topped the list of the 144 nations on the Best Countries of Business in 2015 list by Forbes.
The US has dropped four spots to number 22, continuing a six-year descent since 2009 when it had ranked second overall.
The US is the financial capital of the world and its largest economy at USD 17.4 trillion (China is second at USD 10.4 trillion), but it scores poorly on monetary freedom and bureaucracy/red tape, Forbes said.
India is ranked 97th on the list, with Forbes saying that while the country is developing into an open-market economy, traces of its "past autarkic policies" remain.
"The outlook for India's long-term growth is moderately positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.
"However, India has many challenges that it has yet to fully address, including poverty, corruption, violence and discrimination against women and girls, an inefficient power generation and distribution system, ineffective enforcement of intellectual property rights, decades-long civil litigation dockets, inadequate transport and agricultural infrastructure, limited non-agricultural employment opportunities," Forbes said.
The publication added that India faces other challenges like high spending and poorly-targeted subsidies, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.
Forbes further said that growth in India last year fell to a decade low, as its economic leaders struggled to improve the country's wide fiscal and current account deficits.
"However, investors' perceptions of India improved in early 2014, due to a reduction of the current account deficit and expectations of post-election economic reform, resulting in a surge of inbound capital flows and stabilisation of the rupee," it said.
The country performed moderately well on certain factors, ranking eighth on investor protection, 41st on innovation, 57th on personal freedom and 61st on property rights. It scored low on trade freedom, ranking 125th and on monetary freedom it ranked 139th. On technology it ranked 120th, 77th on corruption and 123rd on red tape.
The United Kingdom and Japan both moved up three spots to No 10 and No 23 respectively. Germany improved two places to No 18 and China rose from No 97 to No 94.
South Africa is ranked 47th on the list followed by Mexico (53), Kazakhstan (57), Zambia (73), Ghana (79), Russia (81), Sri Lanka (91), Pakistan (103) and Bangladesh (121).
The very bottom of the list features a number of emerging markets restrained by high levels of corruption and little freedom.