India’s outward foreign direct investment (FDI) has seen a significant decline in August, dropping to $2.1 billion from $3.4 billion in the same month last year. This represents a 38% decrease year-over-year. Compared to the previous month, the decline is even more pronounced, with a 49% drop from $4.1 billion in July.
The Reserve Bank of India (RBI) data reveals that the decline in outward FDI is attributed to a decrease in all three components: equity, loans, and guarantees. Equity investment fell to $939.6 million in August, down from $1.2 billion last year and $1.7 billion in July. Debt, or loans, also decreased to $510.3 million in August, compared to $682.1 million last year and $737.2 million in July.
Guarantees for overseas units saw the sharpest decline, moderating to $647.8 million in August from $1.5 billion last year and $1.64 billion in July. This represents a 57% decrease year-over-year and a 61% decrease compared to the previous month.
Despite the overall decline, some Indian companies continued to make significant investments abroad. Tata Steel committed $355 million in equity to its Singapore-based subsidiary, while Zydus Medtech invested $232.6 million in its French subsidiary, comprising $230.3 million in guarantees and $2.3 million in equity. Samvardhana Motherson International also invested $230.3 million in debt in a joint venture in the Netherlands.
The decline in India’s outward FDI may be indicative of a cautious approach by Indian companies in the face of global economic uncertainty. However, the continued investment by companies like Tata Steel, Zydus Medtech, and Samvardhana Motherson International suggests that Indian businesses remain committed to expanding their global presence. Overall, the data suggests that Indian companies are adopting a more measured approach to foreign investment, with a focus on strategic and targeted investments rather than broad-based expansion.