As Prime Minister Narendra Modi government works to attract foreign institutions to invest in India, Indian companies too are keen to invest abroad. Indian companies invested $12.25 billion under both the approval and automatic routes in the first eight months of the year, which has been in sync with steady outflows witnessed in the last couple of years, said a report by Care Ratings. Out of this, the actual outflow would be $6.35 billion while the balance of $5.90 billion would be in the form of guarantees, the report added. The guarantees would result in an outflow only in case of a default, and hence will be a contingent liability on the books of the investing company.
It is to be noted that in FY20, around $13 billion was invested by the Indian companies, which was the second successive year of double-digit overseas investment since FY13. In the current financial year, the USA, Singapore, Netherlands, British Virgin Islands, and Mauritius were the favourite investment destinations of the Indian firms. These five countries accounted for nearly 70 per cent of the total investment.
Where does the investment go?
The Indian companies mostly invested in four key areas — financial, insurance, and business services; manufacturing; agriculture and mining; and wholesale, retail trade, restaurants, and hotels. These four segments accounted for around 90 per cent of total overseas investments. The only other sector to register proposals of above Rs 100 crore was agriculture and mining.
Which Indian companies invested the most?
ONGC Videsh, JSW Steel, Haldia Petrochemicals, HCL Technologies, and Mahindra & Mahindra were the top 5 investors with an individual investment of over $500 million. Further, Adani Properties, Lupin, Piramal Enterprises, Cadila Healthcare, Infosys, and Tata Steel, followed the top 5 investors. 11 companies, each with an investment of above $200 million had a sum of $6.18 billion in this eight-month period, which is more than half of the total investment.
Meanwhile, investing in overseas markets helps to diversify business revenue and hence seen to complement domestic efforts. The performance so far this year has been impressive given the pandemic as it does reflect that India Inc has continued with its global investment plans, Care Ratings added.