Foreign direct investment in India is set to swell in coming years as investors stomach a lack of transparency, poor infrastructure and policy paralysis in their search for growth, professional services firm Ernst & Young (E&Y) said in a report.

Overseas investment in Asia's third largest economy rose for the first time in three years in 2011, the report noted, as global investors put their faith in rising salaries, an expanding middle-class and a large and cheap labour force.

"The fundamentals that make India attractive to investors remain intact," Farokh T. Balsara, head of markets at Ernst & Young India, wrote in the report released on Sunday.