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Overseas Investment Trends
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India’s net international investment position, i.e., the stock of external assets net of the stock of external liabilities, has witnessed continuous improvement in the recent years. Latest available data on international investment position, which pertain to end-March 2005, show that India’s external assets continued to be dominated by reserve assets. As regards external liabilities, the share of non-debt liabilities such as direct and portfolio investment in total liabilities has increased. Net external liabilities declined by US $ 6 billion during 2004-05 to US $ 41 billion at end-March 2005 as the increase in reserve assets exceeded the expansion in international liabilities. Reflecting these trends, the ratio of net external liabilities to GDP ratio has almost halved since end-March 2003 to 6.3 per cent at end-March 2005.

International Investment Position of India
(US $ billion)
Item End-March
2003 PR 2004 PR 2005 P
A Assets 095.6 137.1 169.3
  1. Direct Investment 005.8 007.1 009.6
  2. Portfolio Investment 000.8 000.8 000.8
  2.1 Equity Securities 000.4 000.4 000.4
  2.2 Debt Securities 000.4 000.4 000.4
  3. Other Investment 012.9 016.3 017.4
  3.1 Trade Credits 001.1 001.9 003.9
  3.2 Loans 001.4 001.7 001.8
  3.3 Currency and Deposits 007.5 009.6 008.3
  3.4 Other Assets 002.9 003.1 003.3
  4. Reserve Assets 076.1 113.0 141.5
         
B Liabilities 156.0 184.1 210.1
  1. Direct Investment 031.2 039.1 044.5
  2. Portfolio Investment 032.4 043.7 055.5
  2.1 Equity Securities 020.1 034.0 042.8
  2.2 Debt Securities 012.3 009.8 012.7
  3. Other Investment 092.4 101.3 110.2
  3.1 Trade Credits 004.8 006.3 009.6
  3.2 Loans 061.1 061.9 065.9
  3.3 Currency and Deposits 025.6 032.2 033.5
  3.4 Other Liabilities 000.9 000.9 01.2
         
C Net Position (A-B) -60.4 -47.0 -40.9
         
D Net Foreign Liabilities to GDP (%) 012.7 008.1 006.3

Memo:

Debt Liabilities/Total Liabilities

Non-debt Liabilities/Total Liabilities

 
067.1 060.3 058.5
032.9 039.7 041.5
PR: Partially revised. P: Provisional.
  Source: Reserve Bank of India

Sectorwise Classification of Approved Overseas Investments

During the period from April 1999 to July 2006, the largest amount of approvals for overseas investment was in the manufacturing sector at US$ 10509 million(million) followed by financial and non-financial services sector (including software development) at US$ 5187million, trading sector at US$ 951 million and other activities at US$ 613 million respectively.

(Amount in US$ million)
Year Manufacturing Financial services Non financial services Trading Others
1999-00 548.840 4.260 1143.520 58.310 2.300
2000-01 370.740 16.610 876.530 89.170 29.140
2001-02 2210.900 48.620 565.490 139.180 61.340
2002-03 1056.740 1.820 280.170 69.880 61.690
2003-04 765.640 35.110 438.790 76.940 134.080
2004-05 2026.430 9.210 548.240 69.120 151.330
2005-06 1711.080 167.710 707.440 134.340 134.290
2006-07 (April-July 06) 1818.582 4.513 339.290 314.398 38.602
Total 10508.950
(61%)
287.853
(1.6%)
4899.470
(28.4%)
951.338
(5.5)
612.772
(3.5)
Source: Ministry of Finance

Regionwise approved overseas investments

In the year current financial 2006-07 (April-July 06), European Common Market Region (US$ 630.75 million) accounted for major share of India's overseas investment followed by Other European countries Region (US$ 623.59 million) and Organisation Commune African El Malagache Region (US$ 529.02 million).

2006-07 (April – July 06)
Amount in US$ million
Name of the Region No. of approvals Equity Loan Guarantee Total
Central American Common Market 001 -- 0.096 -- 0.096
Common Wealth of Independent States 006 4.506 6.002   10.508
East African Community 001 0.200 - - 0.200
East European countries 002 0.528     0.528
Economic Commission for West Asia 050 27.094 27.820 86.089 141.003
European Common Market 074 557.332 73.419 -- 630.751
European Free Trade Area 007 0.289 0.410 -- 0.699
Economic & Social Commission for Asia & Pacific 108 345.303 31.710 24.000 401.013
North America 114 145.360 13.516 5.600 164.476
Organisation of African Unity 008 3.098 -- -- 3.098
Organisation Commune African El Malagache 036 336.850 181.171 11.000 529.021
Other African countries 007 9.942 0.078 -- 10.020
Other Central American & Caribbean countries 002 0.620 2.000 -- 2.620
Other European countries 006 89.758 43.038 490.800 623.596
South America 003 0.239 0.130 2.400 2.769
Total 425 1521.119 374.390 619.889 2515.389
Source: Ministry of Finance

Countrywise Approved Indian Direct Investments in Joint Ventures and Wholly Owned Subsidiaries

During the period from April 1996 to July 2006, Russia was the largest recipient of approvals for Indian direct investment at US$ 2828 million, followed by USA at US$ 2619 million, Mauritius at US$ 1927 million, Sudan at US$ 1035 million and U.K at US$ 989 million.

During the year 2005-06, Brazil was the largest recipient of approvals of Indian direct investment at US$ 420.12 million followed by Mauritius at US$ 332.66 million, Netherlands at US$ 284.62 million and USA at US$ 270.25 million.

(Amount US$ million)
S.No Name of
the country
Apl. 1996 to
Mar 2002
2002-03 2003-04 2004-05 2005-06
(as on Feb. 06
Total
1 Afghanistan -- -- --- --- 0.055 0.055
2 Algeria -- -- 0.54 0.25 0.235 1.025
3 Australia 6.99 94.97 92.87 158.76 75.121 428.711
4 Austria 77.64 --- --- 0.11 --- 77.750
5 Argentina 0.30 --- --- --- --- 0.300
6 Azerbaijan 0.01 --- --- 2.05 --- 2.060
7 Bangladesh 14.95 1.18 4.08 1.72 1.135 23.065
8 Bahamas 0.01 --- 0.02 --- --- 0.030
9 Bahrain 11.36 1.16 --- 0.05 0.042 12.612
10 Belgium 5.15 0.30 9.19 1.06 69.382 85.082
11 BritishVirgin Island 776.53 3.27 4.92 131.41 26.304 942.434
12 Belize 0.36 --- --- --- --- 0.360
13 Bermuda 232.63 28.95 142.46 221.26 2.600 627.900
14 Botswana 3.46 --- 0.05 0.02 0.017 3.547
15 Brazil 12.98 5.17 4.95 17.21 9.943 50.253
16 Burkino Faso -- -- -- 0.05 --- 0.050
17 Channel Island 13.64 0.49 --- 3.61 37.490 55.230
18 Cameroon -- 0.02 --- --- --- 0.020
19 Canada 5.58 2.34 0.66 0.80 1.557 10.937
20 Cayman Island 11.63 --- --- 2.76 82.437 96.926
21 Colombia 16.23 --- --- --- --- 16.23
22 Congo ---- --- --- --- 0.220 0.220
23 China 38.35 29.55 26.59 15.13 51.757 161.377
24 Cambodia       0.04 --- 0.040
25 Cyprus 1.85 --- 0.03 1.93 9.163 12.973
26 Czech Republic -- -- 0.01 0.35 0.421 0.781
27 Denmark 0.01 --- --- 6.78 16.516 23.306
28 Egypt 8.49 0.01 --- 3.07 0.100 11.67
29 Ethiopia 0.54 0.57 0.22 0.20 1.796 3.326
30 France 5.07 1.83 84.37 22.31 0.619 114.199
31 Finland 2.40 --- --- 0.03 --- 2.430
32 Germany 11.82 4.92 18.24 9.09 30.777 74.847
33 Georgia --- --- --- --- 0.130 0.130
34 Ghana 0.03 0.33 0.01 --- 0.660 1.030
35 Greece 0.05 --- --- --- --- 0.050
36 Honduras Republic --- --- --- --- 0.200 0.200
37 Hong Kong 445.12 14.80 16.15 73.64 46.333 596.043
38 Hungary 5.51 --- 1.89 --- --- 7.400
39 Indonesia 20.19 0.12 19.30 80.80 7.818 128.188
40 Iraq --- --- --- --- 5.000
41 Iran 59.15 43.60 0.49 0.21 0.100 103.602
42 Israel 2.88 --- --- 0.68 --- 3.560
43 Ireland 43.46 --- 4.63 1.93 3.112 53.132
44 Italy 42.21 0.09 0.06 7.62 0.216 50.196
45 Ivory Coast 0.01 --- --- 7.24 6.852 14.102
46 Jordan 0.03 -- --- --- -- 0.030
47 Japan 5.74 0.37 0.04 --- 0.087 6.237
48 Kazakhstan 4.44 0.11 74.96 44.00 9.600 133.110
49 Kenya 12.75 0.59 1.77 0.19 0.250 15.550
50 Kuwait 11.81 0.04 0.21 1.55 0.301 13.911
51 Kyrgyzstan 7.98 0.15 --- 2.75 2.000 12.880
52 North Korea -- -- 51.51 --- --- 51.510
53 South Korea 0.45 --- --- 1.55 --- 2.000
54 Liechtenstein 0.01 --- --- --- --- 0.010
55 Luxembourg 17.30 0.95 --- --- -- 18.250
56 Libya 30.00 --- --- --- 25.280 55.280
57 Liberia 0.28 --- --- --- --- 0.280
58 Malta 21.69 24.37 40.25 10.04 --- 96.350
59 Mauritius 618.34 133.35 175.59 149.38 306.585 1383.245
60 Myanmar 8.07 --- 4.31 --- --- 12.380
61 Maldives 21.00 --- --- --- --- 21.000
62 Moldova --- --- --- 3.75 1.500 5.250
63 Malaysia 39.22 0.79 1.44 4.85 4.374 50.674
64 Republic of Madagascar 0.03 --- --- --- --- 0.030
65 Morocco 32.49 --- --- --- --- 32.490
66 Mozambique -- -- -- 2.55 7.515 10.065
67 Mexico 0.70 0.50 --- 0.26 0.400 1.860
68 Nepal 67.00 5.69 5.32 3.86 0.793 82.663
69 Netherlands 157.92 15.92 30.18 30.65 263.991 498.661
70 Niger --- --- --- --- 0.010 0.010
71 Nigeria 6.69 4.08 2.16 7.53 3.151 23.611
72 Namibia 0.06 --- --- 0.001 --- 0.060
73 New Zealand 0.13 0.57 0.03 0.00 0.102 0.832
74 Norway -- 0.01 --- --- --- 0.010
75 Oman 204.88 0.35 1.51 5.00 2.256 214.377
76 Pakistan -- 2.50 --- --- --- 2.500
77 Philippines 0.14 0.01 0.79 3.34 4.478 8.758
78 Poland 0.11 0.12 0.37 0.50 0.483 1.583
79 Portugal 3.01 --- --- --- --- 3.010
80 Panama 0.67 --- --- --- 19.209 19.879
81 Qatar -- --- 0.32 --- --- 0.320
82 Romania -- --- 0.10 --- 10.506 10.606
83 Russia 1748.68 0.15 1.43 1076.17 1.168 2827.598
84 South Africa 21.56 0.07 0.79 2.88 10.311 35.611
85 Sierra Leone -- -- -- 0.01 --- 0.011
86 Saudi Arabia 18.81 0.12 3.27 --- --- 22.200
87 Senegal 22.24 --- --- --- 1.00 23.240
88 Singapore 152.96 46.79 15.85 239.029 186.482 641.111
89 St. Vincent --- --- --- 0.050 --- 0.050
90 Sri Lanka 61.58 6.60 44.52 9.95 17.154 139.804
91 Spain 0.55 0.04 0.19 0.008 2.089 2.824
92 Sudan -- 750.00 162.03 51.548 63.048 1026.626
93 Sweden 0.64 0.01 2.16 --- 4.500 7.310
94 Switzerland 6.99 1.05 0.75 2.452 60.865 72.107
95 SyrianArab Republic --- --- 9.45 --- --- 9.450
96 Tajikistan 0.36 --- --- 0.041 --- 0.401
97 Taiwan -- -- -- -- 0.230 0.230
98 Thailand 25.09 7.73 7.36 3.465 3.237 43.877
99 Tanzania 4.02 0.01 0.08 0.342 --- 4.452
100 Trinidad & Tobacco 2.09 --- 0.60 --- --- 2.690
101 Turkey 0.06 --- --- --- 0.236 0.242
102 UAE 110.24 12.60 32.07 41.851 121.390 318.151
103 Uganda 2.44 --- 0.010 0.190 -- 2.640
104 U.K 410.62 34.53 138.48 71.852 146.868 802.350
105 Ukraine 0.70 --- --- 3.960 -- 4.660
106 USA 1540.83 185.27 207.14 251.732 252.832 2437.804
107 Uruguay -- 1.39 1.96 1.800 25.250 30.400
108 Uzbekistan 25.73 1.56 0.16 0.177 0.027 27.654
109 Vanatua 0.001 -- --- 2.301 0.175 2.477
110 Vietnam 228.79 0.06 0.04 0.055 --- 228.945
111 Zambia 2.35 -- --- 0.105 --- 2.455
112 Zanzibar 0.09 --- --- --- --- 0.090
113 Zimbabwe 1.11 --- --- 0.175 0.300 1.585
Source: Ministry of Finance

The overseas investment approvals have been steadily increasing since 1996 both in terms of number of approvals and value. Indian investments abroad has gone upto 1395 number of approval of (US$ 2855 million) in the financial year 2005-2006 as compared to 290 approvals (US$ 557 million) in the fiunancial year 1996-97, an increase of 380% in terms of number of approvals and 513% in terms of value of investments approved.

In the current financial year 2006-07 (April-July 06), 245 approvals were granted to Indian companies for overseas investments worth US$ 2515 million as compared to 582 approvals worth US$ 798 million in the corresponding period of last year.

(Amount in USD million)
Financial
Year
No.of approvals Equity Loan Guarantee Total Annual Cap Actual outflows
1996-97 290 363.73 37.76 155.12 556.61 500 204.99
1997-98 228 482.01 8.34 135.52 625.87 750 120.77
1998-99 275 144.98 18.48 86.21 249.67 750 142.83
1999-00 395 1298.93 50.44 407.64 1757.01 750 318.64
2000-01 714 1176.83 89.84 113.43 1380.10 1000 1211.85
2001-02 908 2712.46 157.21 155.86 3025.53 1000 981.67
2002-03 1034 1298.69 104.49 141.53 1544.71 1000 1799.08
2003-04 1214 822.40 229.90 413.84 1450.56 Annual ceiling removed w.e.f. 1.4.2003 1494.26
2004-05 1281 2010.03 384.39 409.91 2804.33 ---- 1648.14
2005-06 1395 1887.87 629.74 337.32 2854.84 ---- 3342.13
2006-07 (April-July 06) 425 1521.12 374.39 619.89 2515.40 ---- 501.71
Source: Ministry of Finance

Actual outflows of overseas investments

Actual outflows rose from US$ 205 million in 1996-97 and to US$ 3342 million in the year 2005-06 a jump of 1530%.

In the current financial year 2006-07 (April - July 06), actual outflows stood at US$ 502 million as compared to US$ 622 million in the corresponding period of last year.

US$/million
Financial year Equity Loan Invoked guarantee Total
1999-2000 314.31 3.93 0.40 318.64
2000-2001 1138.32 68.55 4.98 1211.85
2001-2002 859.82 121.43 0.42 981.67
2002-2003 1698.70 100.38 -- 1799.08
2003-2004 1233.91 260.35 -- 1494.26
2004-2005 1259.96 388.18 --- 1648.14
2005-2006 2547.82 791.31 3.00 3342.13
2006-2007 (April-July 06) 366.08
(420.35)
90.57
(191.18)
--
(--)
501.71@
(621.53)
Source: Ministry of Finance

Note – Figures in brackets represent the amount for the corresponding period in the previous year.

@ Includes remittance of US$45.06 million made under automatic route not taken into the system.

Inflows from Joint Ventures (JVs)/Wholly Owned Subsidiaries(WOSs)

Foreign exchange inflows from Indian overseas investments in joint ventures and wholly owned subsidiaries have been steadily rising. While inflows rose from US$ 49 million 1999-2000 to US$ 51 million in 2000-01, there was more than six fold increase in 2003-04 when the inflows aggregated US$ 351 million. Thereafter, the inflows have declined to US$ 90.73 million and US$ 67.59 million in the year 2004-05 and 2005-06 respectively.

The inflows during the current financial year 2006-07 (April-July 06) by way of repatriation of dividend etc. from overseas JV/WOS was US$ 14 million and non equity exports was Rs.182 crores.

US$ million
Financial year Dividend Others (Tech.know-how, royalty, Engg. fees, consultancy etc.) Total @ Non-equity exports
(Rs. in crs)
1999-2000 17.63 031.56 049.19 0555.30
2000-2001 12.50 038.93 051.43 1325.80
2001-2002 36.31 242.97 279.28 1889.68
2002-2003 33.60 068.66 102.26 1007.07
2003-04 26.24 324.49 350.73 0627.08
2004-05 24.23 066.50 090.73 0854.06
2005-06 12.02 055.57 067.59 1116.43
2006-07
(April-July 06)
02.69
(7.16)
011.42
(31.62)
014.11
(38.78)
181.86
(297.05)
Source: Ministry of Finance

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