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<\/p>\nInterrupting a two-month streak of decline, outward foreign direct investment (FDI) rose sequentially to $1.85 billion in July over $1.07 billion in June, an increase of 73 per cent.<\/p>\n
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However, it was lower than the $2.18 billion in July last year, according to the Reserve Bank of India data.<\/p>\n
Outbound FDI, expressed as financial commitment, has three components – equity, loans, and guarantees.<\/p>\n
The commitments (under outward FDI) stood at $1.29 billion in May.<\/p>\n
Outward FDI was $2.52 billion in April, the RBI data showed.<\/p>\n
However, bankers said it was too early to come to a conclusion about changes in trends of decline seen through this calendar year.<\/p>\n
The slowdown in global economic and business activities, especially in developed markets, has impacted direct investment flows, both inbound and outbound.<\/p>\n
Showing the effect of global slowdown, net FDI in India declined sharply to $4.99 billion in the April-June quarter (Q1FY4) from $13.92 billion in the same period a year ago.<\/p>\n
The moderation in gross inward FDI, coupled with a rise in the repatriation of investment from India, resulted in a decline in net FDI.<\/p>\n
Madan Sabnavis, chief economist, Bank of Baroda, said while it would be premature to call the rise in outbound FDI a change in trend, Indian businesses were trying to go beyond the domestic market, where the scope for private investment had been limited.<\/p>\n
Opportunities are opening up in developed markets and valuations are better for making investments in subsidiaries, joint ventures, and new investments.<\/p>\n
Getting into the components of outbound FDI, the RBI data showed the equity commitment declined to $442 million in July from $488 million in June.<\/p>\n
It was lower than the $629 million in July 2022.<\/p>\n
The debt commitment rose to $605 million in July from $255 million in June.<\/p>\n
However, it was over three times over the $180 million in July 2022.<\/p>\n
The guarantees for overseas units grew to $806 million in July from $329 million in June.<\/p>\n
However, they were much lower than the $1.37 billion in July 2022.<\/p>\n
Key deals in July included a debt support by Tata Steel of about $361 million provided to Singapore-based ABJI Investment PTE Co Ltd, followed by Tata Chemicals’ guarantees of $160 million to its Singapore-based unit Tata Chemicals International.<\/p>\n
India Inc filed ECB intents worth $2.55 bn in July.<\/p>\n
Indian corporates have filed application with Reserve Bank of India in July 2023 for raising $ 2.55 billion through External Commercial Borrowings (ECBs).<\/p>\n
This includes an intent by Reliance Jio Infocomm for $1.56 billion for local sourcing of capital goods (rupee expenditure).<\/p>\n
According to Reserve Bank of India data Reliance Jio Infocomm would raise ECB money having approximate maturity of 121 months from commercial banks.<\/p>\n
REC Ltd intends to raise $ 500 million from the overseas branch of Indian Commercial bank.<\/p>\n
The maturity of ECB money is 60 months and would be used for on-lending purposes.<\/p>\n