Tentative global recovery notwithstanding, Indian companies continue to look abroad for greener pastures investing as much as USD 17.6 billion in April-September this fiscal while outward investment in the fiscal 2013-14 was USD 36.9 billion, an ASSOCHAM study has found.
Although Indian firms have invested overseas in the first half of the current fiscal, almost same as the comparable period of 2013-14, they are expected to retain their appetite for opportunities abroad, the paper said. “What is adding to their quest for going abroad is the attractive valuations of assets abroad , given the fact some of the markets like European Union are facing slowdown with several of the home companies seeking to exit”, said Mr D S Rawat ASSOCHAM Secretary General.
Even in the US, valuations are attractive. Exit options are entry opportunities for several global firms, including from India, the paper said. Besides the assets buying opportunities in various sectors, the Indian firms are making fresh investment in their existing facilities including in the manufacturing.
The ASSOCHAM recent paper on “India’s Capital Exports”, foreign investment was nearly USD 17.2 billion in 2008-09 but touched a peak US $ 43.9 billion in 2010-11. In 2013-14, foreign locations investment touched around US $36.9 billion than the US $ 26.8 billion in 2012-13.
About 5028 Indian companies have invested in foreign locations during April 2009 to September 2014. The top hundred companies that have recorded significant foreign investment account for 76.01 percent share in total foreign investment by Indian companies.
The sectoral pattern of foreign locations investment during April 2009 to September 2014-15 reveals that Indian companies have been investing largely in manufacturing sector and transport, storage and communication. The combined share in total foreign locations investment of these sectors is 52.7 percent during the period
Indian companies have invested US$ 51.5 billion in manufacturing sector which is almost 30 percent of total outflows in the sector for the five year period under review. Investment from India has reached nearly 113 countries, adds the ASSOCHAM report.
Mauritius is the most attractive destination for manufacturing sector investment having a share of 30.7 percent of the total overseas flows followed by Singapore (13.3 percent), United States of America (11.5 percent), Netherlands (11.1 percent), United Arab Emirates (7.35 percent), Switzerland (5.1 percent), British Virgin Islands (3.3 percent), United Kingdom (2. percent) and Cyprus (2.02 percent).
The top ten countries account almost for 88 percent of outward investment in manufacturing. Transport, storage and communication sector is the second most attractive sector for the Indian companies investing in foreign locations. The sector has recorded US $ 42.04 billion investment in foreign locations from India and it accounts for 24.1 percent share in total foreign locations investment during April 2009 to September 2014.
Netherland and Singapore accounted for almost 90 percent of the outflows in all while Mauritius was the top location in manufacturing, points out the paper.
Financial, insurance, real estate sector are the next most sought after sectors for outward flows. They recorded US $27.7 billion investment during April 2009 to September 2014-15 which is almost 16 percent of the total foreign locations investment during the same period.