Outbound FDI Likely to Outshine Inbound FDI

The FICCI-Ernst and Young joint report on “Direct Investments in the United States of America by Indian Enterprises” also brings to light the fact that Indian companies ventured into 48 deals in 2006-07 with investments adding up to USD 2 billion.

The IT and ITes companies were involved in 48% of the deals. Amongst
the top buy-outs, Tata Tea’s takeover of Energy Brands Inc. was the largest for USD 677 million, followed by OVL’s purchase of Omimex de Columbia for USD 425 million.

Small and medium enterprises (SMEs) forayed into pharma, healthcare,
irrigation, electricals, automotives, textiles, telecom, paint,
paper and gems and jewellery markets besides IT and ITes in their
drive for expansion and diversification.

The shopping spree marks the maturing of Indian corporates and
their confidence and ability to take risks. In fact, FICCI has
forecast deals worth USD 10 billion in the USA by 2010.

Smaller sized
deals in the USD 20 – 60 million range are pushing up outbound
FDI in a big way. Indian firms are also graduating from buying up
brands to investments in manufacturing, technology, and R & D.

The Indian government has been supportive in this regard with liberal
policies to facilitate the takeovers, and the Commerce Ministry
has offered to assist Indian firms to explore M&A opportunities in the global arena.

Photo: Kolkata street (3536956405) by Ben Sutherland, licensed under CC BY 2.0, via Wikimedia Commons.