Indian investments in foreign countries slowing

The current financial year is experiencing substantial sluggishness when it comes to Indian investments in most preferred destinations including Mauritius, Singapore and the United Arab Emirates, latest data showed.

The Indian investment in the island nation off the southeast coast of the African continent from April to December 5, 2011 has only been $1814.1 million as against $5045.8 million in 2010-11.

The investment to the country from India, which has been at the top of the 2009-10 list of the destinations to which Indian investment is flowing, was $3798.5 million.

Similarly, investments from India to Singapore in the current financial year till December 5 stood at $1568.6 million as against $3982.5 million in 2010-11.

The country was at the top of the list in 2009-10 with $3798.5 million investment.

Kumkum Sen, partner, Bharucha & Partners Delhi Office, cites a reason for the change in the dynamics: the current global economic scenario.

That has made those interested in making overseas investments become conservative, she notes.

"People are not taking risks. They are adopting a wait-and-watch policy. This situation is unlikely to improve till the end of the current financial year," she adds.

Raising resources for overseas investments is also being seen by the experts as a critical factor.

The Indian investment in Netherlands during April-December 5, 2011-12, has been $617 million, as compared to $1516.6 million in 2010-11 and $1529.9 million in 2009-10.

The investments in the the USA during April-December 5, 2011-12, stood at $614.37 million, as against $1207 million in 2010-11 and $870.4 million in 2009-10.

The pertinent figure for the United Arab Emirates was $260 million, as compared to $849.3 million in 2010-11 and $637.5 million in 2009-10.

The investments to Cayman Island during April-December 5 has been $141.08 million, as against $439.31 million in 2010-11.

A

senior finance ministry official says no particular reason can be attributed for the slowness in the Indian investments to these destinations.

"It seems that no big deals are happening this year.

"We have witnessed significant interest from Indian companies abroad in the last few years," he says.

"The scenario seems to be changing as growth options have been receding abroad too."

Bucking the trend, however, investments to the United Kingdom and British Virgin Island have been better this year. Indian investment in the UK till December 5 this year stood at $901.59 million, as compared to $402.45 million in 2010-11 and $344.95 million in 2009-10.

As for British Virgin Island, the figure stood at $442.80 million vis-a-vis $281.08 million in 2010-11.

The Reserve Bank of India has, since 2008, taken many steps to promote investment from India to other countries apart from liberalisation of the provisions associated with performance guarantee, issuance of corporate guarantee and restructuring of balance sheet of the overseas entities.