Investments abroad not only stimulate economic symbiosis between India and the host nation, but also help in strengthening the Rupee, directly involving the ordinary citizens of the nation. Overseas Direct Investment (ODI) also enhance exchange of technology, skills, generate employment, and utilise raw materials in India and the host countries. Most importantly, ODI gives India access to global markets, integrating the Indian economy to the rest of the world and making a global footprint for the nation.
According to the RBI data, the ODI for the past three years are given below.
As the chart above shows, FDI investments are divided into three categories : Equity, loans and guarantee issued. Most of the investment goes into guarantees, followed by equity and lastly loans. A very small amount of guarantees are actually invoked, so when the flow of dollars is concerned, equity and loans are relevant.
Main Sectors for Investment
From the RBI data for the last 3 years, it is quite clear that manufacturing has attracted the most attention from Indian investors followed by the finance and service sector. India has a service based economy. Even the FDI to India is IT sector, which is again a service based area. Hence Indian investors have to look abroad for investments in the manufacturing sector.
Top Countries for ODI
In the past 3 years the top countries for ODI have been Mauritius, Singapore, USA, UAE, Netherlands. According to the India Brand Equity Foundation (IBEF), these countries have high tax benefits, especially Mauritius, Singapore and Netherlands, which makes them the top ODI countries. Mauritius and Singapore are interestingly the top two countries with FDI in India are Mauritius and Singapore.
In this year’s budget speech, the Finance Minister Arun Jaitley has expressed that the government wishes to bring an integrated and coherent ODI policy. The Hindu reports that such measures could help MNC’s go beyond Merger and acquisitions and open up and extensive global market. If such measures do take place, this would be a huge boost for the corporates and the Indian economy.
source https://www.indiaoutbound.org/india-outbound-investment/
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