NEW DELHI: Once a minnow, India may break into the league of top 20 countries for outbound foreign direct investment (FDI) as early as end-2019, according to a survey of investment promotion agencies (IPAs) by United Nations Conference on Trade and Investment (UNCTAD).
In 2018, outward foreign investment by India was flat at $11 billion.
“India and the United Arab Emirates, not traditionally in the top 20 outward investor countries, were also considered among the top 10 most important sources of FDI for the 2019 to 2021 period," UNCTAD says in its latest World Investment Report.
India’s FDI outflows more than doubled in 2017 to $11.3 billion, mostly led by public sector enterprise Oil and Natural Gas Corp. Ltd (ONGC), which bought a 15% stake in an offshore field in Namibia from Tullow Oil, which was founded in Ireland and headquartered in the UK.
IPAs rank the US and China–in a joint first place–as the most likely sources of foreign investment to their countries. Three large European economies– the UK, Germany and France–were considered the next most important sources of FDI.
After declining 9% in 2017, FDI inflows into India rose 6% in 2018 to $42 billion, according to the report. However, India’s rank as a source country for FDI fell one notch to 10th position, as Spain raced ahead of India.
Notable megadeals in 2018 included the acquisition of Flipkart, India’s biggest e-commerce platform, by US-headquartered retail major Walmart. Besides, telecommunication deals involving Vodafone (United Kingdom) and American Tower (United States) amounted to $2 billion.
Announced greenfield investment into India doubled to $56 billion in 2018, with projects in a number of manufacturing industries, including automotive, attracting funds.
According to the India Brand Equity Foundation, outbound investments from India have undergone a considerable change in the last decade not only in terms of magnitude, but also in terms of geographical spread and sectorial composition.
“While in the first half (of the last decade), overseas investments were directed to resource-rich countries, such as Australia, the UAE and Sudan, in the latter half, OID was channelled into countries providing higher tax benefits such as Mauritius, Singapore, British Virgin Islands, and the Netherlands," it says.
Some of the major overseas investments by Indian firms in recent times include Infosys acquiring a 75% stake in ABN AMRO’s subsidiary in March, and Sun Pharma raising its stake in Russia’s PJSC Biosintez to 96.06% in the same month. In February, auto components major JBM Group had purchased a majority stake in Linde-Wiemann, a German structural components and assemblies producer.