Context:
India is witnessing a significant surge in outward direct investment (ODI) by domestic corporations, raising questions about whether this reflects increasing global competitiveness or underlying concerns about the business environment at home. Indian outward investment has jumped from $4 billion in 2014–15 to $29 billion in 2024–25, a 625% increase over a decade.
What is ODI?
Overseas Direct Investment (ODI) refers to investments made by Indian individuals or companies in businesses, assets, or operations located outside India. These investments typically involve ownership, control, or significant influence in foreign enterprises through subsidiaries, joint ventures, or branches.
Key Features of ODI
- Control & Influence: ODI involves significant control or influence, generally defined as ownership of at least 10% in the foreign entity.
- Purpose:
- Business expansion
- Market diversification
- Access to strategic resources
- Risk distribution across geographies
- Investment Forms:
- Equity participation in foreign companies
- Establishing manufacturing/service units abroad
- Real estate purchases and infrastructure projects
Major Destinations for Indian ODI
- Singapore
- United States
- United Kingdom
- United Arab Emirates (UAE)
- Saudi Arabia
- Oman
- Malaysia
Significance of ODI for India
- Technology & Skill Transfer: Facilitates the inflow of modern practices and R&D back into India.
- Global Market Access: Enables Indian companies to tap into international consumer bases and supply chains.
- Brand Promotion: Enhances the global brand visibility of Indian enterprises.
- Employment Generation: Creates jobs both in the host country and within India through backward linkages.
- Resource Utilisation: Leverages raw materials available in both India and the host country for value addition.
- Boost to Trade: Strengthens foreign trade by building international production and export networks.
- Foreign Exchange Earnings: Generates long-term foreign currency inflows from profits, royalties, and dividends.
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