Introduction
India's outbound investments have evolved not only in terms of volume but also in terms of geographic distribution and sectoral makeup. Direct investment trends over the past ten years have been analysed, and while inward and outward investment flows were rather slow in the early half of the decade, they picked up steam in the latter half. In the last decade or so, there has been a noticeable perceptible shift in Overseas Direct Investments (ODI). In the first half, overseas investments were focused on resource-rich nations like Australia, UAE, and Sudan. In the latter half, OID was directed toward nations offering greater tax advantages, including Mauritius, Singapore, the British Virgin Islands, and the Netherlands. Indian firms invest in foreign shores primarily through Mergers and Acquisitions (M&A). A developing nation like India constantly looks for opportunities to invest extensively outside India as it helps the economy. Overseas investments by Indian companies also help to improve the performance of the country's service and manufacturing sectors and aid in the battle against rising unemployment rates. With rising M&A activity, companies will get direct access to newer and more extensive markets and better technologies, enabling them to increase their customer base and achieve a global reach.
Market Size
In FY25 (April-February 2025), actual ODI stood at Rs. 1.75 lakh crore (US$ 20.6 billion). Of the total amount invested, Rs. 2.13 lakh crore (US$ 24.98 billion) was in the form of issuance of a guarantee, Rs. 59,795 crore (US$ 7.01 billion) was of loans, and Rs. 1.16 lakh crore (US$ 13.61 billion) was infused in the form of equity. Additionally, Singapore was the top investment destination with Rs. 46,915 crore (US$ 5.5 billion). This was followed by United States of America accounting for Rs. 13,658 crore (US$ 1.5 billion) and the United Arab Emirates with Rs. 21,325 crore (US$ 2.5 billion) investments.
Investments/Developments
India is primarily a domestic demand-driven economy, with consumption and investments contributing to 70% of the economic activity. With an improvement in the economic scenario and the Indian economy recovering from the COVID-19 pandemic shock, India is relatively well placed than the rest of the world. Despite major headwinds that continue to pose risks in the short term, the Indian economy has remained strong owing to robust policy measures in place. This gives Indian businesses an advantage to make investments abroad and broaden their operational footprint in such nations. New innovations from abroad would be brought to India with the help of knowledge spill-over, and India itself would contribute to the growth of other nations. In this manner, a mutual benefit is achieved. In this context, there have been several overseas investments made by Indian companies. Some of the key overseas investments and developments that have taken place in the recent past are mentioned as follows:
- According to data released by the Reserve Bank of India (RBI), outward foreign direct investment stood at Rs. 30,708 crore (US$ 3.60 billion) in February 2025.
- The Aditya Birla Group has announced a US$ 50 million investment in the establishment of a new manufacturing and research centre in Texas, United States. The facility, located in Beaumont near Houston, will focus on the production of epoxy resins for a variety of consumer and industrial applications.
- RBI has reported that outward remittances under the liberalised remittance scheme (LRS) reached a new peak of US$ 29 billion during the April 2023- February 2024 period. This figure represents a significant increase of 21.7% compared to the same timeframe in the previous year.
- In April 2024, Infosys acquired In-Tech, a prominent engineering R&D services provider in the German automotive industry, renowned for its expertise in e-mobility, autonomous driving, and electric vehicles. The acquisition will strengthen Infosys' foothold in Europe and expand its capabilities in digital transformation across automotive, rail transport, and smart industry sectors.
- In April 2024, Hero Motocorp announced the launch of a new assembly facility in Nepal in partnership with CG Motors. The assembly unit can produce up to 75,000 units per year and will bring investments and job opportunities in the region.
- Indian companies are actively seeking to expand their global presence, as evidenced by a nearly 17% increase in outward foreign direct investment (OFDI), which reached Rs. 3,25,631 crore (US$ 37.68 billion) in 2024.
- Adani Group has joined forces with Kowa Company to establish a joint venture focused on the sales and marketing of green hydrogen and its derivatives. The production of these green hydrogen products is slated to take place in India under the umbrella of Adani New Industries Limited, with the Adani Group aiming to commence production by the fiscal year 2027.
- The critical investments are as follows:
- As announced in October 2023, after kicking off work on its US$ 4.5 billion integrated steel project, Indian conglomerate Essar Group is drawing up another round of mega investments in Saudi Arabia, which will see it investing in a port-related project in Ras Al-Khair.
- As announced in September 2023, Mr. Naveen Jindal’s owned Vulcan Green Steel is planning a US$ 3 billion investment in Nigeria where it intends to set up a three-million tonne per annum (MTPA) steel plant.
- In July 2023, Tata Sons Pvt. Ltd. announced plans to establish a global battery cell gigafactory in the UK with a capacity to produce 40GW of cells annually, with an investment of over US$ 4.38 billion (£4 billion).
- As reported in June 2023, Reliance New Energy Ltd., a unit of Reliance Industries Ltd, has topped up its investment in German climate technology company NexWafe GmbH. The announcement came more than a year after NexWafe received a US$ 29 million investment from Reliance New Energy as part of its US$ 45 million Series C funding round.
- Indian conglomerate Essar is eyeing investment in Australia’s Galilee Energy to evaluate potential collaboration on coal seam gas (CSG)-coalbed methane projects in both countries.
- In February 2023, Oil and gas producer, Oil and Natural Gas Corporation (ONGC) informed that it will put in over US$ 2 billion in drilling 103 wells in the Arabian Sea as it is working on a turnaround plan which is aimed at adding 100 million tonnes to production.
- In June 2022, Tata Steel announced plans to invest US$ 837.95 billion (7 million pounds) in its Hartlepool Tube Mill in North-East England.
- Tata Communications invested US$ 690 million in its wholly owned subsidiary in Singapore.
- Jindal Steel and Power invested US$ 366 million in its wholly owned subsidiary in Mauritius.
- Wipro invested US$ 204.96 million in its wholly owned subsidiary in Cyprus.
- Jindal Saw invested US$ 64.5 million in its wholly owned subsidiary in the United Arab Emirates.
- Restaurant Brand Aisa and Lupin Ltd invested US$ 141.34 million and US$ 131.25 million in their JVs in Indonesia and the US, respectively.
- Reliance New Energy invested US$ 87.73 million in its wholly owned subsidiary in Norway.
- Mohalla Internet Pvt. Ltd. invested US$ 86 million in its fully owned unit in Mauritius.
- ICICI Bank ties up with Santander in Britain in a pact aimed at facilitating the banking requirements of corporates operating across both countries.
- ANI Technologies, the promoter of OLA, invested US$ 675 million in its wholly owned subsidiary in Singapore.
- Dr. Reddy invested US$ 149.99 million in a joint- venture (JV) in the US.
- A total of US$ 168.9 million was invested by Reliance New Energy in a JV and wholly owned subsidy in Germany and Norway.
- Gail India, energy PSU invested US$ 55.88 million in a JV and wholly owned unit in Myanmar.
- ONGC Videsh Ltd. invested US$ 54.49 million during the month in various countries in 7 different ventures.
- Shilpa Medicare Limited invested US$ 0.17 million a WOS within four countries wherein the major activity is related to manufacturing.
- Jubilant Food Works Limited invested US$ 1.79 million in restaurants and hotels in a WOS in Bangladesh.
Government Initiatives
The government has reduced the restrictions on Indian companies investing overseas by removing the cap on raising funding through the pledge of shares, local assets, and foreign assets in order to encourage international investment. In addition, improving the nation's social and economic stability enables RBI to support foreign investments and other international collaborations. One of the key elements of economic progress in every nation is its robust foreign investments. It demonstrates the confidence and trust that one country has in another and also aids domestic companies to explore better worldwide networks, markets, technology, talents, and resources while enhancing their brand image. In this view, the government has undertaken several steps to support Indian investments abroad. Some of the initiatives are mentioned below:
- Indian government has declared the investment of US$ 3.5 million to support developing countries in improving trade and building capacity, aiming to establish itself as a leader among Global South nations. Efforts will be cantered on people and diverse in approach, with a focus on sharing technology and offering favourable financing for projects.
- India and France are set to launch a collaborative fund supporting startups and climate-centric innovations in the Indo-Pacific. Stemming from the "Horizon 2047" joint vision statement, the Indo-Pacific Triangular Cooperation (IPTDC) fund will drive climate-focused innovations in third countries, aligning with the India-EU Connectivity Partnership.
- On March 10, 2024, India and the European Free Trade Association (EFTA) signed a Trade and Economic Partnership Agreement (TEPA) to enhance trade and economic collaboration between India and EFTA countries, including Switzerland, Iceland, Norway, and Liechtenstein. The FTA will provide a window to Indian exporters to access large European markets.
- The Reserve Bank of India (RBI) issued new guidelines on August 22, 2022, to make foreign investment in shares, immovable properties, etc. easier for Indian retail investors. The new framework/guidelines comprise of Rules (framed by Central Government), Regulations, and Directions (issued by RBI)
- New definition of Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI)
- Overseas Portfolio Investment (OPI) and Overseas Direct Investment (ODI) are two different types of investment routes used by Indian investors to make foreign investments. Under the old regulations/directions, there was no clear distinction between OPI and ODI. Further, OPI was not defined, and under ODI, there was no specific mention of the percentage of equity holding proposed to be bought to qualify as ODI/OPI. Retail Investors faced difficulty in determining whether their investment in foreign entities constituted ODI requiring ODI compliance or OPI.
- The Confederation of British Industry (CBI), Britain’s largest business organisation, and its Indian counterpart, the Confederation of Indian Industry (CII), have agreed to set up a new joint commission to increase cross-industry collaboration and to push the trade deal over the line.
Road Ahead
One of the most important steps to enter the global marketplace is through overseas investment, and India has taken the necessary actions to establish its presence in the global arena. India has been instrumental in signing various memorandum of understanding (MOUs), free trade agreements (FTAs), and Bilateral talks with other nations. India signed a Trade and Economic Partnership Agreement (TEPA) with four EFTA countries comprising Switzerland, Iceland, Norway, and Liechtenstein in March 2024. Union Minister of Commerce & Industry Mr. Piyush Goyal hailed TEPA as a modern and ambitious Trade Agreement. For the first time, India signed an FTA with four developed nations where binding commitment of US$ 100 billion investment and 1 million direct jobs in the next 15 years has been made. This agreement will give a boost to Make in India initiative, provide opportunities to young and talented workforce and provide a window to Indian exporters to access large European and global markets.
This gives India the chance to increase its economy's competitiveness on a global scale and allows Indian corporates to increase their overseas direct investments. In some international markets, the prospects for overseas markets look promising.
For instance, the Indian industry is expected to grow its revenue from Africa. According to McKinsey & Company, India will play a key role in expanding Africa's revenue to US$ 160 billion by 2025 through IT services, infrastructure, agriculture, pharmaceuticals, and consumer products. According to the Ministry of External Affairs, India has initiated a move to set up a direct sea and air link between India and the Latin American region as Indian corporations plan significant investments in the mining, oil, IT, and pharmaceutical sectors in that region. Overseas investment by Indian companies is expected to increase, backed by stable market conditions and the considerable impact of the investment on local economies.
Note: The conversion rate used for March 2025 is Rs.1 = US$ 0.012
References: Media Reports and Press Releases, Press Information Bureau (PIB), Reserve Bank of India (RBI), Directorate General of Foreign Trade (DGFT), ‘Indian Roots, American Soil’ by the Confederation of Indian Industry (CII), Economic Times, Financial Express, Department of Economic Affairs
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