-T.S.Chandrashekar
India is moving a step ahead in the world economy, not for Foreign Direct Investment but as a source of foreign investment, Job Creator and as an economic stimulator.
According to The US India Business Council Report ‘Investing in America, How India Helps Create American Jobs’ Investment by Indian companies in the US has touched a record $11 billion and has created more than 100,000 jobs by 2013.
According to White House Fact Sheet on Indian Investment “Indian investment capital is spread throughout the United States; it has reached states on both coasts and in the American mid-west. Geographically diversified investment by Indian firms has helped to support employment, particularly in towns reliant on industry and manufacturing that faced difficulties during the recent economic downturn.”
Presently many Indian Private Companies, State Navratnas, Semi Navrathnas and other Public are increasingly expanding their footprints in foreign lands through direct investments. It is said that in the next decade or so nearly 2,200 Indian firms are anticipated to invest in markets abroad.
The Indian Government Support through Government Initiatives, RBI’s relaxed norms for overseas investment by Indian corporates by raising their borrowing limit, RBI’s allowance of
limited liability partnership (LLP) firms to carry out financial commitment to/on behalf of JV or wholly owned subsidiaries of the Indian companies, raising of (RBI) annual overseas investment ceiling for Indians to US$ 125,000 from US$ 75,000 to set up joint ventures (JV)/ wholly owned subsidiaries have paved more ways for India FDI abroad in the oil, mining, IT and pharmaceutical sectors of the world.
India is also taking the route of Mergers and Acquisition Transactions. It is reaching new market with direct access with new products and technologies, which would enable them to increase their existing customer base and achieve a global reach. Overseas direct investments by Indian companies stood at US$ 1.59 billion in May 2014. The investments in the form of equities, loans and guarantees were US$ 155.69 million, US$ 182.59 million and US$ 1.26 billion, respectively, during the month, according to data released by the RBI.
According to data released by accounting and consulting firm, Grant Thornton total value of India’s outbound M&A deals (year to date April 2014 was US$ 1.19 billion (35 deals). For the Year 2013-14, Netherlands with 28.8%, Singapore with 15.2% got the most FDI from India. Total FDI made by India during the period stood at US$ 29.29 billion. To mention some of the big investments acquired, partnered and merged includes ONGC in Kashagan Oilfield in Kazakhstan, Imperial Energy Corp-UK, stake in Empresa Mixta in Venezuela, Oil and Gas Assets in Brazil, Tata Group acquired Corus and Tata Motors Jaguar Cars and Land Rover, Daewoo Commercial Vehicles.
Airtel went with Zain Africa, Hindalco to Canada’s Novelis, Tanti Group of Companies and Arcapita Bank BSCc acquired majority stake in Honiton Energy Holdings China, Adani Enterprises went to Port Terminals (Abbot Point X50 Coal Terminal) Australia. Essar Steel acquired Algoma Steel in Canada and Essar Global Minnesota Steel in US.
Reliance Industries went for Oil and Gas Assets (Marcellus Shale) and Eagle Ford Shale Fas Field in the US. Recently Glenmark Pharmaceuticals started manufacturing facility in La Chaux-de-Fonds, Switzerland, Zomato acquired New Zealand’s MenuMania. Cipla reached Yemen for its fifth acquisition deal for manufacturing and distribution business in Yemen, Motherson Sumi Systems Ltd acquired Ohio-based Stoneridge Inc’s wiring harness business.
Quick Heal Technologies has opened two new branches in Africa and the Middle East which are in addition to its existing set up in Japan. Everstone Capital has picked up 51 per cent stake in Domino’s Pizza’s Indonesian local franchise, PT Dom Pizza.
Tata Group plans to set up an international nodal office in Dubai to help group companies grow faster in the MENA (Middle East and North Africa) region.
Future lies for Indian industry to increase revenue from Africa, South America and the World. Information technology (IT) services, agriculture, infrastructure, pharmaceuticals and consumer goods are the key to India boosting.
Mr. Rajat Gupta, Director, McKinsey & Co. thinks India can get Africa revenues of US$ 160 billion by 2025. Between 2004 to 2013FDI flow from Europe, US and Japan was $200 billion, $138 billion and $ 50.7 billion dollars, while India’s outward flow for now is $29 billion USD.
(The author is an expert in international relationships and is currently the deputy director of Korea trade promotion agency (KOTRA).He can be reached at kotrabangalore@gmail.com The views expressed in this article are those of the author and do not represent the views of Channel Times or any of the websites managed or operated by Trivone Digital Services)