Globalisation driving Indian firms to invest abroad

Wednesday, 22 September 2004, 07:00 Hrs
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NEW DELHI: India's technological capabilities and rising exports in information technology and pharmaceuticals is driving the country to become a significant outward investor of capital, a UN report said Wednesday.

India's ranking in the outward foreign direct investment (FDI) performance index has improved over the years from 107 in 1999 to 61 in 2003, the World Investment Report of the United Nations Conference on Trade and Development (UNCTAD) said.

In this index, India's position is also close to the 58th rank given to neighbouring China, the report, released here, added.

"India also stands out among Asian investors, not so much because of its recent and significant increase in outward FDI and its potential to be a large outward investor, but because of the trend set by some information technology firms."

According to the report, India's top 15 software and service companies have all invested abroad, mostly in developed countries, while the country's business process outsourcing firms are setting up affiliates in Mexico and the Philippines.

The report said most of the outward FDI from India was in the manufacturing sector, with a 55 percent share, but added that non-financial services also accounted for a significant share of 25 percent.

The report said the most important destinations for Indian FDI were the US (19 percent), followed closely by the Russian Federation (18 percent), due mainly to acquisitions in oil and gas industries.

"Overall, however, about half of total Indian outward FDI has gone to other developing countries," the report said.

The report also gave specific examples to highlight the fact that the trend in India's emergence as an outward FDI investor was continuing in 2004.

* Infosys Technologies Ltd has announced that it would establish a new affiliate in the US to expand its consulting businesses.

* Daksh services, India's largest business-process outsourcing company, which was acquired by IBM this year, had established a facility in the Philippines.

* MsourceF established a Spanish language centre in Tijuanna, Mexico in 2003.

* Hinduja TMT Ltd acquired a controlling interest in c3, a call centre in the Philippines.

* Hindalco acquired two copper mines in Australia last year.

* The Oil and Natural Gas Corp, a state-owned company, bought a 25-percent stake in a Sudan oil from Talisman Energy of Canada for $720 million.

Source: IANS
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