India’s Overseas Investment

India is primarily a domestic demand-driven economy, with consumption and investments contributing to 70% of the economic activity. With an improvement in the economic scenario and the Indian economy recovering from the Covid-19 pandemic shock, India is relatively well placed than the rest of the world.

  • Despite major headwinds that continue to pose risks in the short term, the Indian economy has remained strong owing to robust policy measures in place. This gives Indian businesses an advantage to make investments abroad and broaden their operational footprint in such nations.
  • New innovations from abroad would be brought to India with the help of knowledge spillover, and India itself would contribute to the growth of other nations.
  • In this regard, there have been several overseas investments made by Indian companies.

Some of the key overseas investments and developments that have taken place in the recent past are mentioned as follows:

  • According to data released by the Reserve Bank of India (RBI), overseas direct investment stood at US$ 1,922.51 million in September 2022.

The critical investments are as follows:

  • In June 2022, Tata Steel announced plans to invest 7 million pounds (US$ 837.95 billion) for its Hartlepool Tube Mill in North-East England.
  • Tata Communications invested US$ 690 million in its wholly-owned subsidiary in Singapore.
  • Jindal Steel and Power invested US$ 366 million in its wholly owned subsidiary in Mauritius

Challenges

  • Higher Transaction Costs
  • Currency Volatility
  • Liquidity Risks
  • Regulatory Hurdles

State Action

  • The government has reduced the restrictions on Indian companies investing overseas by removing the cap on raising funding through the pledge of shares, local assets, and foreign assets in order to encourage international investment.
  • In addition to this, improving social and economic stability in the nation enables RBI to support foreign investments and other international collaborations.
  • One of the key elements of economic progress in every nation is its robust foreign investments. It demonstrates the confidence and trust that one country has in another and also aids in domestic companies to explore better worldwide networks, markets, technology, talents, and resources while enhancing their brand image.
  • In this view, the government has undertaken a number of steps to support Indian investments abroad.

Related Content