OVERSEAS DIRECT INVESTMENT BY INDIAN COMPANIES

 OVERSEAS DIRECT INVESTMENT BY INDIAN COMPANIES

• Integration of the Indian economy with the rest of the world is evident not only in terms of higher level of FDI inflows but also in terms of increasing level of FDI outflows as overseas investments by the Indian entrepreneurs in joint ventures (JV) and wholly owned subsidiaries (WOS). Outbound investments from India have undergone substantial changes not only in terms of size but also in terms of geographical spread and sectoral composition. 
• Outward Foreign Direct Investment (OFDI) from India stood at US$ 1.86 billion in the month of June, 2016.The overseas investments have been primarily driven by resource seeking, market seeking or technology seeking motives. Many Indian IT firms like Tata Consultancy Services, Infosys, WIPRO, and Satyam acquired global contracts and established overseas offices in developed economies to be close to their key clients.
•  Of late, there has been a surge in resource seeking overseas investments by Indian companies, especially to acquire energy resources in Australia, Indonesia and Africa. Indian entrepreneurs are also choosing investment destinations in countries such as Mauritius, Singapore, British Virgin Islands, and the Netherlands on account of higher tax benefits they provide.
• At present, any Indian investor can make overseas direct investment in any bona- fide activity except in certain real estate activities. This has been made possible by progressive relaxation of the capital controls and simplification of procedures for outbound investments from India. 
• For example, the annual overseas investment ceiling to establish joint ventures (JV) and wholly owned subsidiaries has been raised to US$ 125,000 from US$ 75,000. The RBI has also relaxed norms for foreign investment by Indian corporates by raising the borrowing limit. Policies in respect of foreign investments undergo far reaching changes from time to time. (Learners are expected to keep pace with the modifications in government policy in respect of inbound and outbound foreign investments).