A considerable amount of time has flown since the period when India was primarily seen as a destination for global foreign direct investment. The trend continues but with a difference. Over the last few years, the growing ambitions of Indian firms, both big and small, have added a new dimension to the Indian economy. This has been made possible through a reverse flow of resources as outward FDI from companies in India looking to become global players. With the result some ambitious and daring steps were taken by the Indian Inc lately. Hindalco-Novelis, Tata Steel-Corus, Suzlon-REpower, Wipro-Infocrossing, United Spirits-Whyte & Mackay are some of the major acquisitions by the Indian corporate abroad.
As per the RBI's data for the year 2007-08, the total outward investment from India, excluding that made by individuals and banks, rose 29.6 percent to $17.4 billion, largely due to acquisitions. A large part of this was through the equity route. If we consider a sectoral spread of India's investments abroad, manufacturing topped the charts followed by the non-financial service sector.
Within the manufacturing sector, investments were in industries such as electronic equipment, fertilisers, agricultural and allied products and gems and jewellery, while within non-financial services, investments were targeted at telecom, medical services and software development services. But the data for the number of overseas investment proposals, which almost doubled in the first half of 2008-09 (from 1,049 proposals in H1 of FY08 to 2,000), reveals that Indian firms are still looking forward to investing abroad.
The direction of investment proposals reveals that the US, Singapore, Netherlands, Mauritius and Britain together accounted for more than 60 percent of proposed outward investment from India as against the first half of FY08 when Netherlands (largely used as an investment route by Indian firms to invest in Europe) led the charts followed by Singapore among other nations.
Lately France and Canada have also entered the fray as they offer attractive investment opportunities for the India Inc. For instance France represents a market of 63 million consumers and is situated at the heart of the worlds' biggest market, the European Union, with some 493 million citizens. In 2006, France was the 3rd leading economy in Europe and the 5th leading economy worldwide. It is the 4th leading exporter of services and the 5th leading exporter of goods. Similarly, Canada's prudent fiscal policy, low inflation, interest and unemployment rates, and a corporate tax framework is among the best in the world.
According to the World Economic Forum's 2008-2009 Global Competitiveness Report, Canada has the soundest banking system anywhere. Canada's well-regulated financial institutions, banks, trust companies, cooperatives, insurance companies and stock exchanges, have demonstrated a stability and competitiveness that has made their services popular around the world.
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