Financial Daily from THE HINDU group of publications
Friday, Oct 01, 2004
Corporate - Overseas Investments
India dons foreign direct investor mantle
New Delhi , Sept. 30
BUOYED by the inroads made by its software, biotech, auto ancillary and oil companies abroad, India seems to have dropped the tag of being just an FDI destination and is increasingly donning the mantle of a major foreign direct investor. And the investments span not only across the developing world but even in first-world nations including the US, the UK and Germany.
With annual outflows averaging at $1 billion (around Rs 4,600 crore), the country's ranking in UNCTAD's outward FDI performance index has already shot up from the 107th position in 1999 to the 61st spot in 2003.
Even more noteworthy is the fact that the two most important destinations for Indian FDI last year were the US and the Russian Federation, accounting for around 37 per cent of the total Indian overseas investments during last year, while Europe accounted for 40 per cent of the total outflow.
The top 15 software and service companies in the country have all invested abroad, while Indian BPO firms are setting up outfits in countries as varied as Mexico and the Philippines.
ONGC's 25 per cent stake buy-out in a Sudan oil firm from Talisman Energy of Canada for $720 million (around Rs 3,312 crore), the Hinduja's purchase of controlling interest in C3, a call centre in the Philippines, and Msource's Spanish language centre in Tijuanna, Mexico, were among the large investments by Indian firms abroad last year, according to the UNCTAD data.
Bharat Forge's acquisition of CDP in Germany, Amtek Auto's acquisition of GWK in the UK, and Sundram Fasteners' acquisition of Cramlington Precision Forge Ltd marked the Indian auto ancillary companies' foray into the global market.
According to analysts, the UK remains the gateway for investments by India Inc in Europe.
During 2003-04, the country has seen a 47 per cent jump in investments, as compared with the previous year. According to a report by the UK Trade and Investment, India is now the second largest source of FDI into the UK from Asia in terms of projects and jobs generated, while it ranks eighth overall.
The emergence of India as a major force in the investment scenario seems to have prompted visits by delegations from the UK and the Invest in France Agency (IFA) to try and woo Indian industry bigwigs to invest in their countries.
The first six months of the current fiscal has seen a significant increase in FDI outflow, with companies such as Tata Steel, Reliance, Raymond, Jubilant Organosys and Jindal Stainless emerging as corporate raiders overseas.
Analysts expect the tally to go up further by the end of the financial year.
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