May 17, 2021
From $USD1.21 bn in April 2020, the total Indian OFDI has shown a two-fold increase at $2.51 bn.
Loans, equity capital and bank guarantee together constitute the $USD 2.51 bn.
The major Indian investors in overseas ventures include Tata Steel, Interglobe Enterprises, Reliance, Varroc Engineering and Motherson Sumi Systems.
Most of these firms have made investments in their wholly owned subsidiaries and joint ventures abroad.
Data released by the Reserve Bank of India (RBI) indicates a sharp rise in India Inc’s foreign investment in the current fiscal. Total outward foreign direct investment (OFDI) at $USD 2.51 bn in April 2021 is up two-fold over the figure of $USD 1.21 bn in April 2020. Out of the total overseas investment of $USD 2.51 bn by Indian companies, $USD 1.75 bn has been in the form of loans, $USD 421.42 mn was as equity capital, while $USD 333.11 mn was issued through bank guarantees, according to the data on OFDI for the month of April 2021.
Indian firms had invested $USD 1.99 bn in their overseas ventures, as of March 2021. The major investors include Tata Steel, which has invested $USD 1 bn in its wholly owned subsidiary in Singapore, Interglobe Enterprises Pvt Ltd, with an investment of $USD 145.61 mn in a UK-based joint venture, and Reliance Industrial Investments & Holdings Ltd, which has invested $USD 78.52 mn in a wholly owned unit in the UK. Alongside Reliance Brands, Reliance Industries has invested $USD 91.56 mn in its wholly owned subsidiaries and joint ventures in the UK, Singapore, the UAE and the USA. Varroc Engineering invested $USD 65.5 mn in a wholly owned unit in the Netherlands while Motherson Sumi Systems has invested $USD 41.70 mn, in a wholly owned firm in the UAE. This data from the RBI is, however, provisional and subject to changes depending on the online reports from the authorised dealer (AD) banks.
It is interesting to note that the rise in the OFDI in the current fiscal year comes despite the constraints faced by the Indian economy following the second wave of Covid-19. This development could be attributed to the location determinants of the Indian OFDI such as the larger markets of the aforementioned countries, the presence of the double taxation avoidance agreements, which India has with over 80 countries including those mentioned above, and their low rates of inflation.