Update: March 2012 Outward FDI by Indian Companies

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Apr. 12 – According to data released by the Reserve Bank of India, Indian companies’ foreign direct investments rose 38 percent month-on-month in March, with bank guarantees continuing to be the biggest contributor.

Indian organizations continue to invest aggressively in foreign destinations to explore new markets and also increase their global footprint while taking advantage of the attractive valuations of assets overseas.

The outward FDI rose in March to US$2.77 billion over the previous month. In February, total outward FDI stood at US$2.01 billion. Reliance Industries was the biggest investor during March followed by Binani Industries with bank guarantees the biggest funding mechanism for these companies. Bank guarantees stood at US$1.42 billion in March compared with US$1.38 billion a month ago.

Tata Group companies invested approximately US$50 million in countries like Mauritius, the UK, the Netherlands and Sri Lanka for manufacturing and other financial services.

The equity that the companies invested overseas during the month of March stood at US$545.77 million, around 67 percent higher than February. The loans stood at US$806.49 million, about 79 percent over February. The majority of the companies are investing in manufacturing facilities in Europe and East Asian countries. The entire investment by Indian organizations in foreign equities was US$545.8 million in March compared with US$178.2 million in February.

Dezan Shira & Associates is a boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in India. For more information, please contact india@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.