India’s overseas investments double at US$ 2.8bn in June 2021

Reliance, ONGC Videsh, Tata Communications, Wipro, WNS Global, and Interglobe were among the chief Indian investors

July 18, 2021

The June figure of US$ 2.8bn is evidence of positive ODI growth from the February figure of US$ 1.85bn.

The African subcontinent and the Latin American countries have ample opportunities for Indian investors.

Real Estate, Hospitality, Oil and Natural Gas, Consumer Goods, and Information Technology are contributors to Indian ODI.

Absorption of new resources, technological upgradation, and acquisition are Indian investors’ key ODI motivations.

According to RBI data, India’s Overseas Direct Investments (ODI) have reached US$ 2.8bn in the month of June. The investment portfolio is currently spread across US$ 1.21 bn worth of loans and US$ 1.17 bn of issuance of guarantee. Although the investment figure is 58 percent lower than that in May 2021, the development is still a step in the right direction. The data also reveals that Reliance Industries (Singapore), ONGC Videsh (Mozambique and Russia), Tata Steel (Singapore), Wipro (USA), Tata Power (Mauritius), and WNS Global (Netherlands) were among the chief investors. Of this, ONGC Videsh, WNS Global Services, Interglobe Enterprises, and Tata Communications participated in Joint Ventures during the month. 

As of February 2021, India’s Overseas Direct Investments were documented at US$ 1.85bn, marking a 31 percent year-on-year decline. At that time, the companies that invested in overseas ventures were Sun Pharmaceuticals and Tata Steel. Despite ODIs seeing a decline, the month saw Outward Foreign Direct Investment (OFDI) cross the US$ 1bn mark. In order to increase the scope of Overseas Direct Investments, the Government of India has taken on the creation of air links and sea links to the Latin American countries. Furthermore, opportunities have been identified in the African subcontinent to promote activity in the agriculture, consumer goods, oil and natural gas, Information Technology and pharmaceutical sectors. 

The post-liberalisation period coupled with increased globalisation has fuelled an increase in international FDI activity. A report by the Exim Bank attributes the increase of export revenue from sectors such as natural resources and manufacturing to the increase in ODI among developing economies. Sectors including hospitality, real estate, insurance, wholesale and retail trade as well as business services have historically been the key contributors to the ODI economy. The report also identifies three reasons as to why Indian firms participated in ODIs: (i) absorption of resources, (ii) acquisition, (iii) technological upgradation. An increase in both FDI inflows and ODIs can boost competitiveness within multiple sectors of the economy and cement India’s position as a reliable trading partner. 

FDI