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Bulk of India's investments in US in metals, IT sectors: USIBC Report

The Hindu Business Line:  November, 2010

New Delhi: With India already the third fastest growing investor in the US, it's the metals and manufacturing sectors that are clear favourites when it comes to Indian investments in the US.

During the last five years (2004-09), 90 Indian companies made 127 greenfield investments worth $5.5 billion, of which nearly half was in the metals sector, with the software and information technology (IT) sector coming in a distant second with less than 15 per cent of the investment pie. Industrial machinery and the equipment tools sector cornered six per cent of the total investments, as was the case with the leisure and entertainment sectors, according to a report titled ‘US India Business-Advancing bi-hemispheric partnership' prepared by the US India Business Council (USIBC), KPMG and Everstone Capital.

Prominent amongst the greenfield investments is the acquisition of the privately-owned Minnesota Steel plant by Essar Steel to build a new integrated steel plant at the same location, entailing investments to the tune of $1.6 billion.

Top destinations

The top three destination states for Indian greenfield investments were Minnesota, Virginia and Texas, in that order.

During the five-year period, a total of 239 Indian companies made 372 acquisitions in the US.

Five states that attracted the most M&A (mergers and acquisition) investments from Indian companies, accounting for 75 per cent of total deal value, were Georgia, New Jersey, Michigan, California, and Texas.

The bulk of M&A investments by India Inc. in the US were in manufacturing and other industrial sectors, rather than in services for which India is well known.

The five leading US sectors receiving M&A investments from India were namely — manufacturing, IT and IT-enabled services, biotech, chemicals and pharmaceuticals, automotive, and telecom, which accounted for 83 per cent of the total deal value.