In the fiscal year 2023, India's outward direct investment (ODI) resulted in the United States receiving Rs 1.24 lakh crore, representing a 13.6 percent share, while the United Kingdom received Rs 1.16 lakh crore, constituting 12.8 percent of the total.
During the same financial year, Singapore emerged as the foremost beneficiary of ODI by Indian corporations, garnering Rs 2.03 lakh crore (equivalent to $24.48 billion), which accounted for 22.3 percent of the overall ODI. According to data from a Reserve Bank of India study, the total outward direct investment by Indian companies surged by 19.46 percent, reaching Rs 9.11 lakh crore (equivalent to $109 billion) in FY2023, compared to Rs 7.62 lakh crore the previous year.
The top ten countries collectively absorbed 85 percent of India's ODI, with Switzerland receiving Rs 28,228 crore (equivalent to $3.40 billion).
Notably, among the top ten countries that received Indian outward direct investment (ODI), three jurisdictions renowned for their favorable tax conditions stand out. According to data from the Reserve Bank of India (RBI), Bermuda received Rs 12,582 crore (equivalent to $1.51 billion), Jersey received Rs 11,661 crore ($1.40 billion), and Cyprus received Rs 9,985 crore ($1.20 billion). For instance, Bermuda imposes no taxes on profits, income, dividends, or capital gains. It lacks restrictions on profit accumulation and does not mandate dividend distribution, as outlined in a report by PwC.
Meanwhile, in fiscal year 2023, the United States emerged as the largest contributor of inward foreign direct investment (FDI) to India. Following the U.S., Mauritius, the United Kingdom, and Singapore also made substantial contributions to India's FDI inflows, with the top ten countries collectively constituting more than 90 percent of these flows.
According to data from the Reserve Bank of India (RBI), in the fiscal year 2023, the United States attracted FDI amounting to Rs 8.58 lakh crore (equivalent to $103 billion), reflecting a 17.2 percent share, compared to Rs 8.05 lakh crore in the preceding year. Mauritius, on the other hand, received FDI worth Rs 7.43 lakh crore (previously Rs 7.79 lakh crore), accounting for a 14.9 percent share, while the United Kingdom received Rs 7.08 lakh crore (compared to Rs 5.83 lakh crore).
The overall FDI inflow in FY2023 amounted to Rs 49.93 lakh crore (equivalent to $601 billion), an increase from Rs 46.72 lakh crore in the previous year. Other prominent contributors to FDI included Singapore (Rs 6.59 lakh crore), the Netherlands (Rs 5 lakh crore), and Japan (Rs 3.98 lakh crore). Out of this total, Rs 47.75 lakh crore represented equity investments, while the remaining portion constituted debt.
The information is sourced from the Reserve Bank of India's annual survey on foreign liabilities and assets (FLA), which encompasses the cross-border liabilities and assets of various entities such as companies, limited liability partnerships, alternative investment funds, and partnership firms engaged in inward or outward direct investment (DI). In the most recent survey cycle, out of the 38,689 entities that participated, 33,850 disclosed their FDI and ODI holdings in their balance sheets as of the end of March 2023.
Within the realm of FDI equity, the manufacturing sector retained its position as the top recipient in terms of both market value and face value. Among services, the sectors of information & communication, as well as financial & insurance activities, stood out as the primary beneficiaries of foreign direct investment (FDI).
According to the RBI report, a striking observation is that more than 97 percent of the entities engaged in direct investment (DI) that responded to the survey were not publicly listed as of March 2023, and these unlisted entities constituted the majority of India's FDI equity capital. Among these entities, non-financial companies held the largest portion of FDI equity in terms of face value. Furthermore, the market value of FDI in unlisted firms exceeded that in listed companies.
