As Indian corporates scout overseas for foreign companies on sale, India’s outbound foreign direct investment (FDI) may actually better the incoming FDI target of USD 30 billion in 2007-08. The total outbound deals for mergers and acquisitions by Indian companies, surpassed USD 15 billion in 2006 and FICCI and Ernst and Young have jointly predicted the figure to shoot past USD 35 billion this fiscal year.

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.

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