India Inc snaps up $29.3-b worth overseas assets this fiscal

Outward foreign direct investment from the country, which was on slippery road during the past two fiscals, has seen some signs of recovery in the current fiscal with the total deal value touching USD 29.34 billion so far, says a report.

"The period between FY07 and FY11 has been buoyant at times for outward FDI investments, but there has been a slowdown since then. Investments declined in FY12 and FY13, but there has been a recovery in FY14 so far," Care Ratings said in a report.

Total FDI investments made by domestic companies between April-January of FY14 stood at USD 29.34 billion, the report said.

The declining trend in outward FDI started from FY11 when it stood at USD 19.25 billion to USD 11.18 billion in FY12, and to USD 7.13 billion in FY13.

The rating agency said after moderate FDI investment between FY03 and FY04, investments started gradually increasing because of the relaxations in overseas investment policy in 2004.

Outward investments by domestic companies picked up significantly since FY07 and peaked in FY09 with investment of USD 19.45 billion abroad, it said.

FDI is divided into three categories--equity, loans and guarantee issued. Most of the investments are made in the form of guarantee issued followed by equity, and lastly in the form of loans.

Out of the total investments made in the April-January period of FY14, USD 19.12 billion were guarantee issued, which accounted for 65.1 per cent, Care said.

During the period, investment in equity and loans stood at USD 7.1 billion and USD 3.21 billion with a share of 23.9 per cent and 11 per cent, respectively.

On sectoral basis, the highest investment of USD 8.91 billion was in transport, storage and communication services space, while USD 7.56 billion were invested in manufacturing related activities, the report said.

Activities such as wholesale, retail trade, restaurant and hotels attracted USD 2.91 billion from domestic companies in FY14 so far.

Significantly, only USD 32 million were invested in electricity, gas and water and miscellaneous activities.

Geographically, the Netherlands and Singapore were the favourite destinations of domestic companies, with a share of 28.8 per cent and 15.2 per cent in total investments, respectively.

This was followed by the British Virgin Islands and Mauritius with 10.3 per cent and 7 per cent respectively, with the value USD 3.69 billion and USD 3.13 billion respectively.

The US accounted for 7 per cent of investments amounting to USD 2.13 million.

Domestic companies made lesser investments in countries such as Azerbaijan (2.8 per cent), the Cayman Islands (1.8 per cent), Hong Kong (1.1 per cent), Cyprus (0.9 per cent), Saudi Arabia (0.9 per cent), Belgium (0.6 per cent) and Oman (0.4 per cent), the report said.