Outbound FDI may touch 35 bn

The total outbound foreign direct investment FDI in 2007 may exceed the target of 30 billion in fiscal 2007-08, a study said. 8220;For Indian corporate sector, 2006 was a watershed year in terms of mergers and acquisitions as Indian companies went shopping across the globe. The total outbound deals, which were valued at 4.3 billion in 2005, crossed 15 billion-mark in the following year and could well breach the 35-billion level this year,8221; the report by Ficci and Ernst 038; Young said.

The report also revealed that Indian companies invested over 2 billion in 2006-07 in 48 deals with the US counterparts. Top three of the 48 deals are Tata Tea8217;s 677 million acquisition of Energy Brands Inc, OVL8217;s Omimex de Columbia takeover for 425 million and Tata Coffee8217;s 220 million deal with Eight O8217;Clock Coffee Company. However, the Tatas later sold its 30 per cent stake in Energy Brands Inc to Coca-Cola for 1.2 billion.

Besides the bigger deals, small and medium enterprises also made acquisitions in areas like IT, ITeS, pharma and healthcare, irrigation, electricals, automotives, textiles, telecom, paint, paper and gems and jewellery.

The investments were primarily driven by increased profitability, cost advantage, increased willingness of corporate India to take on risk, a liberal regulatory stance of the Indian government and exposure of domestic companies and their management to the US companies, the Ficci-Ernst 038; Young report said.