Outward foreign direct investment rises by 17% to $37.68 billion in 2024

“This is a positive sign that Indian companies are also going global. They are not just eyeing domestic investments but also looking at other territories. In a way, they are diversifying their growth models,” said Madan Sabnavis, chief economist, Bank of Baroda.

Overseas direct investment means acquisition of any unlisted equity capital or subscription as a part of the memorandum of association of a foreign entity, or investment in 10 per cent or more of the paid-up equity capital of a listed foreign entity, or investment with control where investment is less than 10 per cent of the paid-up equity capital of a listed foreign entity.

OFDI has three components — equity, loans and guarantee issued. In the last calendar year, overseas FDI by local companies in the form of equity stood at $12.69 billion, a rise of 40 per cent over the $9.08 billion invested in 2023.

Under the loan category, OFDI by Indian companies was $8.7 billion in 2024, compared to $4.76 billion in the previous calendar year. The guarantee issued by domestic firms declined to $16.29 billion in 2024, as against $18.44 billion in 2023.

The sectors where Indian companies invest in overseas markets include hotels, construction, manufacturing, agriculture, mining and services. The countries that have seen total financial commitment by way of ODI are Singapore, US, UK, UAE, Saudi Arabia, Oman and Malaysia, among others.

“The fact that Indian companies are investing in their own subsidiaries indicates that they are expanding outside. This also shows that local companies that have joint ventures are collaborating more with companies in overseas territories,” Sabnavis added.

Overseas investments in joint ventures (JV) and wholly owned subsidiaries (WOS) have been recognised as important avenues for promoting global business by Indian entrepreneurs.

Joint ventures are perceived as a medium of economic co-operation between India and other countries. Transfer of technology and skill, sharing of results of research and development (R&D), access to wider global market, promotion of brand image, generation of employment and utilisation of raw materials available in India and in the host country are other significant benefits arising out of such overseas investments.

They are also important drivers of foreign trade through increased exports of plant and machinery and goods and services from India and also a source of foreign exchange earnings by way of dividend earnings, royalty, technical know-how fee and other entitlements on such investments.