With the House of Tatas willing to pay $8.04 billion for Corus Steel, there is every indication that overseas investments from India could be way ahead of the foreign direct investment into the country during the current financial year.
While Commerce Minister Kamal Nath has set the target for FDI at $12 billion for 2006-07, outbound investment for January-September 2006 has touched $18.73 billion compared with $8.84 billion in the same period last year, according to data compiled by Dealogic.
Data compiled by the Department of Industrial Policy and Promotion shows that FDI inflows during January-July 2006 touched $4.74 billion compared with $2.17 billion in the same period in 2005.
Though some this investment is bound to have been made in the previous financial year, experts feel the scales would tilt heavily in favour of outbound investments with Tatas inking the Corus deal.
A recent study done by McKinsey on 'Indian companies going global' for Confederation of Indian Industry's National Council Meeting also states that non-triad companies (i.e. country or region other than United States, Europe, and Japan) particularly Chinese and Indian companies are rushing overseas.
The study points out that not only are Chinese and Indian companies getting aggressive in cross-border acquisitions, but the number of such deals is increasing with increasing ticket sizes.
For instance in the case of India, the number of deals valued at an average size of around $50 million in 2000 was 50, which increased to around 450 in 2006 with an average size of the deal valued at over $300 million.
China and India's globalisation foray is led by the oil and gas industry.
However, while the average deal size is $538 million in the sector, it is $492 million in China. The other top three sectors in India are computers and electronics with average deal size of $178 million, chemicals with average deal size of $161 million and utilities with average deal size of $114 million.
The other top three sectors in case of China are food and beverages with average deal size of $253 million, utilities with average deal size of $238 million and metals with average deal size of $84 million.