Looking to Invest Abroad
Outbound investments from India have undergone a considerable change not only in terms of magnitude but also in terms of geographical spread and sectoral composition. Analysis of the trends in direct investments over the last decade reveals that while investment flows, both inward and outward, were rather muted during the early part of the decade, they gained momentum during the latter half.
There has been a perceptible shift in Overseas Investment Destination (OID) in the last decade or so. While in the first half, overseas investments were directed to resource-rich countries such as Australia, UAE, and Sudan, in the latter half, OID was channeled into countries providing higher tax benefits such as Mauritius, Singapore, British Virgin Islands, and the Netherlands.
Indian firms invest in foreign shores primarily through Mergers and Acquisition (M&A) transactions. With rising M&A activity, companies will get direct access to newer and more extensive markets, and better technologies, which would enable them to increase their customer base and achieve a global reach.
India is one of the fastest growing economies in the world, drawing the attention of many international investors. Whereas the Silicon Valley boom of the 1990s forced Indian entrepreneurs in the technology and science industries to flock to America to start companies and accrue funding, now, private investors who’ve had success in markets like Australia, America, and the UK are looking to India to find their next great investment.
For example, the founders of Google and Yahoo! actively seek out investment opportunities in India. Even lesser known angel investors – wealthy individuals who invest smaller amounts of money at the start-up level – have taken an interest in India’s growing number of entrepreneurs, providing them not only with start-up capital but also with their business knowledge and networks from previous investments.