India Inc prefers to invest abroad than at home in Jan-Feb

Indian companies have invested $1.65 bn abroad in February after $3.3 bn in January

With the domestic markets facing a slowdown and policy paralysis, India Inc is increasingly looking towards foreign countries for growth. The latest to join the foreign bandwagon is Jindal Steel and Power which is investing $2 billion in a power plant in Africa and the Birlas who announced an investment of $750 million across the world to increase its aluminium capacity.

The latest figures from the Reserve Bank of India suggest that Indian companies have invested close to $1.65 billion in February in overseas. This number follows the $3.3 billion of investment abroad in January and is higher than investments made by Indian companies in India as well as FDI in the country. 

Corporate leaders say due to high costs of finance and low demand in India, they are investing abroad. “The industry has realised that for the next one year nothing will move in India due to elections. Hence, it is better to invest abroad where the interest rates are low and laws are crystal clear,” said P Krishnamurthy, Director of SKIL Infrastructure.

India’s biggest capital goods company – Larsen & Toubro’s new mantra is to look abroad even as margins are far lower in foreign countries. “Our area of focus right now is West Asia, some parts of Africa and East Asia where we are involved in infrastructure construction, hydrocarbon and power projects. When it comes to exports, as opposed to doing projects on the ground, our heavy reactors go to Brazil, Russia, China and elsewhere," says AM Naik, Executive Chairman, L&T.

Chairman of Aditya Birla group, Kumar Mangalam Birla recently said delays of two-three months were pretty much the norm in India at present and it had been noticed that India was the least transparent and most uncertain of the 36 countries that the group operates in.

Birla said the group is interested in companies in chemicals and fertilizers space in North America and is interested in a mid-size acquisition in the US. Among other corporates, Reliance Industries is investing $2 billion in Venezuela while the Tatas are investing in brand new JLR plants in China and Saudi Arabia.