India is world's 21st largest outward investor

“India is now the world’s 21st largest outward investor, which is significant given its historically minuscule foreign direct investment (FDI) outflows,” said Vale Columbia Center on Sustainable International Investment in its report released on Outward FDI from India.

“Annual FDI outflows have jumped fifty-fold after 2000, and Indian firms have invested over $75 billion overseas in the past decade, in some cases to attain global status by acquiring world-leading firms,” the report said.

Substantial improvements in the country’s economic performance and the competitiveness of its firms and their strategy, resulting from ongoing liberalisation in economic and outward FDI (OFDI) policies, made these developments possible, it said.
Indian firms now invest across a wide variety of sectors and countries, departing from their historical focus on trading and textile investments in developing countries.

Following the 25 per cent crisis-induced drop in Indian OFDI in 2009, Indian firms are
once again increasing their overseas investment, including through mergers and acquisitions (M&As), the report said.

“India’s OFDI should continue its rapid upward trend over the next few years, as more companies seek to transfer their products and service innovations to new markets, and acquire strategic international know-how and market shares, particularly in crisis-hit developed economies,” it said.

Another report by the Columbia university released yesterday said that India is now the world’s 13th largest FDI host country. With 2008 inflows of $42 billion and 2009 inflows of $27 billion, it is also global top three preferred investment destination.

“Notable liberalisations in FDI policy and in several economic sectors, a globally competitive workforce, and rapid GDP and market growth are the main drivers of foreign investment in India.

“Yet, equity caps limit the size of potential new inflows, while national security concerns might prompt more oversight of FDI approval processes,” it said.

India had received some $169 billion of cumulative FDI inflows by the end of 2009 since it first opened itself to foreign direct investors in 1991, it said. “Inflows rocketed to $20 billion in 2006, further doubling to $42 billion in 2008, transforming India into the world’s 13th largest host to FDI globally,” it said.

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