India's Outward FDI Investments In November Down Nearly 31% From Year Ago

Indian companies promised a total of $2,307.07 million in November through foreign direct investment (FDI) in other countries, a drop of nearly 31 per cent from a year ago, data released by the Reserve Bank of India showed. The total financial commitment during the month was down nearly 45 per cent from October.

The primary reason for the slump was due to a fall in financial commitment of loans, which fell to a meagre $286.40 million in the month of November. Loans promised by Indian companies slumped over 66 per cent from the previous month. The fall was more pronounced from a year ago, dropping over 70 per cent.

$772.31 million was through an issued guarantee. Guarantees issued in November were up around 20 per cent from a month ago, and 29.5 per cent over the year. Financial commitment made through equity also fell to $978.36 million, which slumped over 55 per cent from the month before. Meanwhile, from a year ago, equity commitments rose over 10 per cent.

Outward FDI is the investment made by Indian firms or individuals overseas, in order to expand operations into a foreign country. These investments are typically made either through equity capital, by reinvesting earnings, or by offering loans to other companies.

A majority of outward investments by Indian companies were made in low-tax jurisdictions, which are also called tax havens. These destinations, such as Singapore, Mauritius, the United Arab Emirates, the Netherlands, the United Kingdom, and Switzerland, continue to draw a majority of investments.

The income tax department had cracked down on investments made by Indians into these tax havens by sending out notices to several foreign firms, according to media reports.

Data from November showed that the highest investment commitment made was by Mavnu Investments, amounting to $340.93 million in a German firm. This was followed by Piramal Pharma’s commitment of $108 million made to the US. The third largest commitment was made by Sun Pharma, amounting to $90.34 million to France.