"Although discussion of India today tends to focus on the growing tide of foreign companies looking to establish operations in the country through direct investment, joint ventures or through outsourcing, today's Indian companies have a truly global vision and are becoming an increasingly important source of outbound investment," said report author, Oxford Intelligence research director, Michel Lemagnen. "The removal in 2005 of key restrictions on Indian companies' ability to expand internationally triggered a sharp increase in overseas expansion. The country's top companies are now in an extremely healthy position in terms of cash, profitability and financing capacity and their potential for international investment, through both M&As and FDI, for the next few years is extremely favourable."
The report shows that, whilst M&A mega-deals such as Tata-Corus have captured world headlines, Indian companies have become increasingly active in a wide range of organic FDI projects. IT/software, life sciences and business services ( especially outsourcing ), where Indian companies are potentially genuine world leaders, have to date dominated that activity - but financial services, electronics, chemicals, plastics and the automotive industry all have significant unrealised potential.
The report also highlights the fact that Indian outbound FDI activity has to date been concentrated in a limited number of countries and, within those countries, in a limited number of cities - in part due to a lack of awareness by Indian companies of the advantages of alternative locations. London is the key beneficiary of Indian outward investment, taking one third of activity in the four years to 2006. Other 'hot spots' of activity are the UAE and China.
