Amid a rise in foreign direct investment inflow, investment by Indians abroad has doubled in July compared to last year, data by Finance Ministry showed. Experts listed ease of norms by RBI and effort to ensure stability in raw material supply as key reasons for this rise.<\/p>\n
Overseas Direct Investment (ODI) data, tabulated by Economic Affairs Department of Finance Ministry, showed that July alone saw an outflow of $2,112 million compared to $1,054 million in July last year. This is a combination of equity as well as loans. Of the total 155 countries that got outflow from India, Singapore tops the destination by getting 1\/4th<\/sup> of the total. Singapore, along with Mauritius, the US, Netherlands and the UK got a total of 68 per cent. Among the sectors, financial, insurance and business services alone got 42 per cent of the total outflow.<\/p>\n According to Vaibhav Kakkar, Senior Partner at Saraf and Partner, overhaul of the overseas investment framework in 2022 played a key role in this surge. Some of the key changes introduced through the revamped framework include the liberalisation of ODI in financial services, express provisions to regulate overseas portfolio investment, promoting investments into GIFT IFSC, among other key aspects. <\/p>\n Following this overhaul, \u201cthe Indian regulator has also been proactive in engaging with all stakeholders, obtaining feedback, and promptly clarifying any ambiguities in the regulations. The recent clarification on investment in overseas funds is a testament to this forward-looking approach adopted by the RBI, and to further simplify the overseas investment regime in the country,\u201d he said.<\/p>\n In 2022, while notifying overseas investment rules and regulations, the Finance Ministry had said that, in view of the evolving needs of businesses in India, in an increasingly integrated global market, there is a need of Indian corporates to be part of global value chain. The revised regulatory framework for overseas investment provides for simplification of the existing framework for overseas investment and has been aligned with the current business and economic dynamics.<\/p>\n Rumki Majumdar, Economist at Deloitte India, feels pursuing investments in essential resources where India has heavy import dependence, especially in sectors such as energy and technology, could be a big reason why companies are looking at diverse regions worldwide to secure raw materials and ensure supply chain stability. Besides, \u201clarge, cash-rich Indian MNCs are increasingly looking to expand their market reach beyond domestic borders, trying to tap into new customers and new geographies to diversify their revenue,\u201d she said.<\/p>\n Sandeep Jhunjhunwala, Partner at Nangia Andersen LLP said that the potential for increased outbound investments from India is intricately linked to a supportive regulatory framework, both domestically and in target countries, as well as the state of global economic conditions and the growth prospects in these markets. While inward FDI highlights India\u2019s appeal as a lucrative investment destination, the rise in outward FDI reflects the country\u2019s ambition and capacity to venture beyond its borders. \u201cThis dual focus is especially beneficial for a developing economy like India, which is not only drawing foreign investors but also seeking to establish a formidable global presence through strategic overseas investments,\u201d he said.<\/p>\n