While Indian companies have flourished in their resilient domestic economy, they are now increasingly looking for opportunities to strengthen their foothold in foreign lands. With a motive to grow inorganically, India Inc is becoming highly transnational and trying to climb up the value chain and conquer larger share in global markets.
According to a survey by the Indian School of Business (ISB), while overseas penetration in developing or under-developed economies is majorly through greenfield investments, most of the Indian companies are adopting merger and acquisition (M&A) route to enter into developed countries. Business conglomerates under the Tatas, Aditya Birla, Reliance, M&M and Godrej account for over 60 per cent of the overseas acquisitions by value, stated the survey. The survey further pointed that the outward foreign direct investment (FDI) is majorly driven by the manufacturing sector, including petroleum, pharma and automobiles as well as non-financial services.
Recent data released by the Reserve Bank of India (RBI) has stated that the Indian companies invested US$ 2.67 billion overseas across 478 deals in April 2012. Since January 2012, a total of US$ 8.25 billion has been invested by India Inc as outward FDI.
Of the total outward FDI for April 2012, guarantees amounted to be at US$ 1.77 billion while equity purchases and loans amounted around US$ 596 million and US$ 312.2 million, respectively.
Some of the April deals are discussed below: