Outward foreign direct investment by Indian companies stabilises in FY24

The outward foreign direct investment (FDI) by Indian companies stabilised in 2023-24 (FY24) after witnessing a fall in 2022-23 (FY23). The actual outward FDI inched up slightly to $13.75 billion in FY24 from $13.49 billion in the previous financial year (FY23), according to finance ministry data. This stability came after a sharp fall in outward flows in FY23 from $18.52 billion in 2021-22 (FY22).

Madan Sabnavis, chief economist at Bank of Baroda, said the outlook appears bright as things are expected to improve this year. Outward investment depends on how the global economy performs as well as the strategies of Indian companies.

“The global economy is the pull factor. The push comes when Indian companies are buying ventures outside or investing in their subsidiaries,” he said.

The combined financial commitment for FDI in three categories — equity, loans, and guarantees — stood at $30.93 billion in FY24, $34.96 billion in FY23, and $52.13 billion in FY22, a year marked by the second wave of the pandemic.

In terms of commitments for equity, the amounts continued a downward trajectory to $8.15 billion in FY24 from $8.62 billion in FY23 and $13.39 billion in FY22.

Guarantee commitments also declined sharply from $33.9 billion in FY22 to $21.65 billion in FY23 and further to $17.4 billion in FY24.

The debt element saw a rise to $5.36 billion in FY24 from $4.67 billion in FY23. It was $4.8 billion in FY22, according to finance ministry data.