[ad_1]
India’s outbound investments jumped by 67.74% on year to $ 41.6 billion in the last financial year with companies in technology, pharma, automobile, hospitality and energy leading the charge, according to a report by EY.
The number of overseas investment transactions have also grown by 15% on year. Another trend that is visible in the overseas investments by Indian companies is the use of newer jurisdictions to route these investments.
According to official data, net outbound investments in 2024-25 were around $29 billion.
Indian companies chase global opportunities, the Foreign Direct Investment (FDI) equity inflows during 2024-25 stood at $ 50.01 billion. Overall FDI including reinvested earnings stood at $ 81.04 billion, according to the Department for Promotion of Industry and Internal Trade (DPIIT).
Diversifying Beyond Traditional Jurisdictions
While intermediary jurisdictions like Singapore, the Netherlands, and Mauritius have long dominated outbound investment structuring, Indian companies are now broadening their horizons.
The shift is being driven by changing global tax rules, tighter regulatory oversight, and evolving strategic priorities. “Countries like the UAE, Luxembourg, and Switzerland are gaining ground, offering a mix of favorable tax regimes, progressive regulatory frameworks, and alignment with India’s interests in sustainability, digital innovation, and trade expansion,” the EY report said.
The UAE is seeing rising investor interest beyond its traditional role in energy, spurred by the India-UAE Comprehensive Economic Partnership Agreement (CEPA) and new opportunities in infrastructure and technology. Meanwhile, Luxembourg’s strength in fund management and green finance, along with Switzerland’s IP-friendly environment and advanced infrastructure, are drawing attention as alternative gateways for Indian capital.
ESG, Tax Rules, and The Rise of GIFT City
Environmental, social and governance (ESG) priorities are now integral to overseas investment decisions. From carbon pricing implications in the EU to supply chain due diligence in the US, companies are embedding sustainability into investment design to meet rising stakeholder expectations and regulatory benchmarks.
Indian companies are increasingly turning to GIFT City as a strategic gateway for outbound investments, with RBI data showing a 100% surge (from $ 0.04 billion in 2022-23 to $ 0.81 billion in 2024-25 over the past two years.
With announcements of US tariff revisions under the ‘One Big Beautiful Bill,’ scrutiny under OECD BEPS Pillar reforms, and sustainability-linked trade measures are adding layers of complexity to cross-border operations. These developments are strategic signals that necessitate a decisive pivot in outbound direct investment strategies. EY said.
Tax Partner EY India Vaibhav Luthraas outbound capital becomes more ESG-sensitive and substance focused, aligning operating models with local expectations is non-negotiable. The right mix of foresight, flexibility and financial structuring will be the differentiator.”
To remain future-ready, EY recommends that Indian multinational enterprises (MNEs) adopt a forward-looking, compliance-first mindset. A multi-dimensional strategic response will be key to sustaining competitiveness and ensuring resilient global growth.
[ad_2]
Source link