Indian companies are increasingly buying up companies abroad as strategic acquisition, indicating the growing competitiveness of the Indian corporate sector. India retains its position as the second highest foreign employer in the UK, after the US, according to the 2009 UK inward FDI official data. This year, Indian inward investors created 4,149 new jobs, with 108 new projects, up 44 per cent from last year.

As per recent data published in the RBI Bulletin, the direction of investment proposals during July-September 2009 indicated that Singapore, Mauritius, Cyprus and the Netherlands together accounted for 64 per cent of the amount of proposals for outward FDI (US$ 5 million and above). Singapore and Mauritius continued to be the leading destinations for India’s outward FDI. During April-September 2009, Singapore, Mauritius, the US, the Netherlands, the UAE and the UK together accounted for 72 per cent of the amount of proposals for outward FDI (US$ 5 million and above). The actual outward FDI in JVs and WOSs stood at US$ 5.8 billion during the period April-September 2009. The pattern of investment proposals during April-September 2009 revealed that manufacturing sector maintained its share in the total amount of proposals.

FDI Outflows

India has been witnessing a surge in outward investment with the number of approved projects on the rise. During the quarter July-September 2009, 1,127 proposals amounting to US$ 4.8 billion were cleared for investments abroad in joint ventures (JVs) and wholly owned subsidiaries (WOSs). Actual outward FDI in JVs and WOSs during the quarter July-September 2009 stood at US$ 3.3 billion.

During the first half of 2009-10 (April-September 2009), 2,045 proposals amounting to US$ 7.5 billion were cleared for investments abroad in JVs and WOSs, the number of proposals recorded an increase of 2.3 per cent over the corresponding period of the previous year. Equity accounted for 51.4 per cent of the proposals for investment, followed by loans (28.0 per cent) and guarantees (20.6 per cent). During the corresponding period of the previous year (April-September 2008), equity constituted 60.1 per cent of the proposals for investment, while loans and guarantees formed 24.9 per cent and 15.0 per cent, respectively. This reflects decrease in the share of equity in the financing of investment proposals during the first half of 2009 as compared to the same period of the previous year.

Route-wise, during July-September 2009, most of the proposals cleared were through automatic route. During the quarter July-September 2009, out of the total amount of outward FDI proposals cleared, 94.1 per cent of the amount was for the investments of US$ 5 million and above. Sector-wise distribution of these investment proposals shows that 41 per cent of the amount of proposals was in manufacturing, followed by non-financial services (8 per cent), trading (3 per cent), financial services (1 per cent) and the balance was in others.

During July-September 2009, within the manufacturing sector, proposals were in the areas like electronic equipments, chemical and related products, cement and cement products, telecom products, software packages, information technology, construction work, power generation, drugs, pharmaceuticals and mining.

Overseas investments

• Mahindra Satyam, the new brand identity of Satyam Computer Services, has announced an expansion of its Global Solution Centre (GSC) operations in Malaysia. The company will move its global software development and delivery operations to its GSC, located at a 15-acre site in Cyberjaya, Malaysia’s prominent info-Comm Technology (ICT) corridor.
• Wipro has launched a new global delivery centre in Chengdu, China, offering IT and BPO services. The centre is to focus on testing and enterprise application services for manufacturing, banking, financial services and insurance industries.
• Infosys BPO, the business process outsourcing arm of Infosys Technologies, is expected to buy the outstanding interests of Atlanta, Georgia-based McCamish Systems LLC, a business process solutions provider to the US insurance and financial services sector.
• TVS Logistics — a part of the TVS group, has acquired Multipart Holding, a leading after market logistics company in the UK. The company expects to invest over US$ 26.78 million in Multipart in the next 18 months in order to expand its operations in the UK and rest of Europe.
• Shree Renuka Sugars Ltd (SRSL), one of the largest producers of sugar in the country, has acquired a foreign sugar and ethanol unit in Brazil. The company acquired Vale Do Ivaí SA Açúcar e Álcool (VDI) at a value of US$ 240 million.
• Tata Steel Global Mineral Holdings, the subsidiary of Tata Steel Ltd, the world’s sixth largest steel manufacturer, has entered a joint venture (JV) with Canada’s New Millennium Capital (NML) and LabMag for developing a direct shipment ore (DSO) project in Canada. The company will invest US$ 285.8 million into the project.
• Indian companies have sustained their investments in London in the financial year 2008-09. The data showed that 14 Indian companies have either set up or expanded their operations in London in the current fiscal. In recent years, major Indian companies including Haldiram, ICICI Bank and Kingfisher Airlines, have set up their offices in London. Also, Wipro and IL&FS have made London their European headquarters.
• India Cements is set to acquire a coal mine in Indonesia for around US$ 20 million.
• Zuri Group Global plans to invest about US$ 247.5 million for setting up five-star business hotels and luxury residential properties over the next three years.
• Trade between the India and Africa rose from US$ 7 billion to US$ 51 billion between 1997 and 2007, an increase of over seven times as revealed by a CII-Exim Bank report released in March 2009. Some Indian companies like Marico, Luminous and Rasna have already made inroads into African countries.
• City-based Elgi Rubber Company has formed a fully owned subsidiary company in Texas, US under the name of Elgi Rubber Company LLC.