Signalling an increase in global participation and competence, India is progressively becoming a source of foreign investment for rest of the world. As per the ongoing trend, wherein emerging market economies (EMEs) are under transition, a number of private players, along with state-owned entities, are increasingly expanding their footprints in foreign lands through direct investments with a view to achieve regional and global reach. In the next 15 years, more than 2,200 Indian firms are anticipated to invest in markets overseas.
Indian firms invest abroad majorly through mergers and acquisition (M&A) transactions. The integration of the country’s economy with the rest of the world has given the domestic corporate sector access to global networks and markets, transfer of technologies and skills and has also facilitated research and development (R&D) for value addition. The Government of India’s supportive policy regime, coupled with India Inc’s experimental orientation will definitely demonstrate an upward trend in outward foreign direct investment (FDI) in the years to come.
Overseas direct investments by Indian companies more than doubled to US$ 5.23 billion in March 2014 as compared to US$ 2.16 billion in March 2013, according to data released by the Reserve Bank of India (RBI). The investments in the form of equities, loans and guarantees were US$ 2.91 billion, US$ 418.72 million and US$ 1.91 billion, respectively, during the month.
India’s outbound M&A grew eight per cent year-on-year (y-o-y) in 2013 in terms of deal value. The total value of outbound deals (Indian companies acquiring businesses outside India) in 2013 was US$ 9.25 billion (82 deals), according to data released by accounting and consulting firm, Grant Thornton.
With Indian corporations increasingly looking at expanding their global footprint by investing overseas, the Netherlands and Singapore have attracted most of the outward foreign direct investments from India, with a share of 28.8 per cent and 15.2 per cent respectively in total investments.
Cipla has invested US$ 1.5 million in the US-based Chase Pharmaceuticals Corporation Inc through its subsidiary, Cipla (EU) Ltd. Chase, which has a patented approach to improve the efficacy, safety and tolerability of existing Alzheimer’s medications, is now focused on developing new approaches to treat the disease.
Adfactors, India's largest public relations (PR) firm and The Holmes Report's 'Asia-Pacific Financial Consultancy of the Year' in 2013, has set up its Sri Lanka office in Colombo. This is Adfactors PR's third office in Asia outside India, after Dubai and Singapore.
Mahindra & Mahindra (M&M) has inaugurated a factory and a research centre for electric two-wheelers in Ann Arbor, Michigan, US. With an initial capacity to produce 9,000 vehicles annually, the plant will assemble its first electric two-wheeler later this year.
Bisleri International has opened its first overseas production unit in Dhaka, the capital of Bangladesh. The new facility, with a production capacity of 6,000,000 bottles a month, has been set up under a franchise arrangement with local firm Chittagong Fashion.
Lodha Group has bought a second building in London for around Rs 1,000 crore (US$ 168.72 million). In November 2013, the Group had acquired MacDonald House in central London which housed the Canadian consulate in UK, for Rs 3,120 crore (US$ 526.54 million).
Hinduja Global Solutions (HGS) has set up a new centre in New Jersey, increasing its presence in the US to 10 locations. The centre will focus on client-facing activities for HGS’ Extended Business Office Solutions (EBOS) and help deliver expanded capabilities for clients.
Reliance Industries Ltd (RIL) has been awarded two offshore blocks, M17 and 18 in Myanmar’s offshore block bidding round 2013. Both blocks are located offshore in Moattama basin of Myanmar at depths of up to 3,000 feet and together encompass an area of 27,600 square kilometres (sq kms).
The Government of India is making all efforts to integrate the country’s economy with rest of the world in the every possible way. To help Indian firms raise capital abroad, the government will allow unlisted Indian companies to list on overseas markets without having to be publicly traded on domestic exchanges.
The RBI has clarified that Indian firms can invest as much as 400 per cent of their net worth outside India by way of external commercial borrowings (ECBs). The Ministry of External Affairs has initiated a move to establish a direct sea and air link between India and the Latin American region, as Indian corporates plan significant investments in the oil, mining, IT and pharmaceutical sectors in the region.
The second meeting of India–UAE high level joint task force on investments (HLTFI) was held on March 3, 2014 in Mumbai. The HLTFI, co-chaired by Mr Anand Sharma, Union Minister of Commerce and Industry, Government of India and Mr Sheikh Hamed bin Zayed Al Nahyan, Chairman, Abu Dhabi Crown Prince Court, was established in April 2012 as a platform to address mutual issues associated with existing investments between the two countries and to promote and facilitate cross-border investments.
India and Canada have signed an audio-visual co-production deal. The agreement would benefit producers from both the countries in pooling their creative, artistic, technical, financial and marketing resources for co-productions and lead to exchange of art and culture among the two countries.
South Africa plans to offer special incentives to tap investment from India in the special economic zones (SEZ) being promoted across each of its nine provinces. The country currently has four Industrial Development Zones primarily focusing on exports.
Indian industry is expected to increase revenue from Africa. Information technology (IT) services, agriculture, infrastructure, pharmaceuticals and consumer goods – are the key to India boosting Africa revenues to US$ 160 billion by 2025, according to Mr Rajat Gupta, Director, McKinsey & Co.
India is one of Vietnam’s largest trading partners. The two-way trade between the countries is expected to reach US$ 7 billion in 2015 and US$ 15 billion by 2020. Indian enterprises hope to strengthen co-operation in oil, gas, steel, thermal power, IT, sugar production, food processing, infrastructure development, pharmacy, and human resources development.
Exchange Rate Used: INR 1 = US$ 0.01687 as on May 15, 2014
References: Media Reports, Press Releases, Reserve Bank of India website