India outbound FDI trends and recent developments

In today’s global environment, emerging market economies are playing a significant role in foreign investment around the world. Outward foreign direct investment (OFDI) is also a key aspect in the globalization of the Indian economy.

Indian companies such as Tata, Birla, Mittal Steel, Reliance, Bharti Airtel, Suzlon Energy, Bharat Forge, Asian Paints, Sundaram Fasteners and Infosys are on a globalization drive and are creating a global footprint. They are going abroad not only to obtain new product mix or acquire new products but also to acquire an international image and vision and promote their brand equity.

Both private-sector companies and public-sector undertakings such as NTPC, GAIL, ONGC and NALCO have made significant overseas greenfield investments as India’s demand for energy rises. Recent big discoveries in Mozambique and increasing opportunities in Tanzania and Kenya are seen as having a huge potential for long-term opportunities in these markets. ONGC is expected to invest up to US$8.8 billion to acquire overseas assets in the next five years.

The main target countries have been the US, UK, Europe, Singapore and Australia, with Africa becoming an increasingly popular destination.

OP Khaitan & Co is a 40-lawyer law firm, based in New Delhi. Gautam Khaitan is the firm’s managing partner and Nidhi Mathur is a junior partner.