India Inc Bets Big On Overseas Investments, Invests $17.6 Bn In Foreign Assets

With a global recovery on the track, India Inc is betting big on overseas investments in the current fiscal year over last year. According to industry body ASSOCHAM’s findings, Indian companies have invested as much as $17.6 billion in April-September in FY 15 as against $36.9 billion in FY 14.

India Inc is expected to continue investing in foreign assets in the remaining quarters of the fiscal year 2014-15.

"What is adding to their quest for going abroad is the attractive valuations of assets abroad , given the fact some of the markets like European Union are facing slowdown with several of the home companies seeking to exit”, said D S Rawat, secretary general of ASSOCHAM.

He further added that Indian companies have been finding the US attractive because of the valuations of their assets. “Exit options are entry opportunities for several global firms, including from India. Besides the assets buying opportunities in various sectors, the Indian firms are making fresh investment in their existing facilities including in the manufacturing,” noted Rawat.

It should be noted that nearly 5028 Indian companies have made investments in overseas assets during April 2009 to September 2014. Nearly 76% of the total foreign investments made by India Inc has been done by the top 100 firms collectively.

“Our recent paper on “India’s Capital Exports”, foreign investment was nearly $17.2 billion in 2008-09 but touched a peak US $ 43.9 billion in 2010-11. In 2013-14, foreign locations investment touched around $36.9 billion than the $ 26.8 billion in 2012-13,” stateRawat.

Interestingly, the chamber revealed that India Inc has been largely investing in the manufacturing, transport, warehousing, logistic and communications sectors abroad. Together, these sectors make up nearly 53% of the total foreign investment pie.

“Indian companies have invested $ 51.5 billion in manufacturing sector which is almost 30 % of total outflows in the sector for the five year period under review. Investment from India has reached nearly 113 countries”, said the paper.

The study also ranked Mauritius as the top investment destination for India Inc with almost 30.7% of the overall investment made in the manufacturing sector of the country by Indian companies. This is followed by Singapore (13.3%), the US (11.5%), Netherlands (11.1%), UAE (7.35%), Switzerland (5.1%), British Virgin Islands (3.3%), United Kingdom (2%) and Cyprus (2.02%).

It is worth noting that the top ten countries comprise of nearly 88% of the foreign investment made by Indian firms in manufacturing sector. “Financial, insurance, real estate sector are the next most sought after sectors for outward flows. They recorded $27.7 billion investment during April 2009 to September 2014-15 which is almost 16% of the total foreign locations investment during the same period,” averred Rawat.