India’s Outbound Investment Surge Signals Confidence, Not Flight

India’s recent surge in outward investment has been met with misplaced anxiety. The Department of Economic Affairs flagged a $12.5 billion rise in 2024-25, warning that it “warrants attention” at a time when domestic investment remains subdued. 

Analysts have pointed to a sharp increase in India Inc’s overseas mergers and acquisitions activity and greenfield investments, with a 10-year peak in volumes during July-September 2024. It has been suggested that Indian companies are strategising to take their money out of the country, thereby displaying a lack of confidence in prospects at home. That conclusion, however, may be overstated.

The evidence points rather to companies pursuing opportunities abroad and strengthening their global positions.

Strategic Push 
Indian companies have often displayed adventurousness during periods of global uncertainty. According to the UNCTAD World Investment Report 2025, India’s overseas direct investments during the Covid lockdown remained steady against the backdrop of a steep fall in global outward FDI flows, and hence its share of the total went up to 1.7%, its highest in the period 2019-2024. In 2024, India accounted for 1.5% of total outward investments, surpassing the figure of 0.9% for the previous year.

A study of monthly outward investments data from the Reserve Bank of India shows that in 2024-25, Indian companies made over 9,000 overseas financial commitments, including equity, loans, and guarantees, totalling $41.6 billion. Actual outflows, excluding uninvoked guarantees, totalled $27.2 billion, with a sharp rise in the fourth quarter. This is different from the data released by the Department of Economic Affairs, which stood at $25.2 billion.

The list of outward investments for high-value financial commitments of $10 million and above shows over 500 transactions, contributing over four-fifths of the total outward commitment value. The largest ODI investor for the year was Tata Steel, investing $3 billion in its Singapore subsidiary. Public sector companies including Bharat Petroresources, ONGC Videsh and ONGC Mozambique, and Indian Oil Corporation invested nearly $2.5 billion in the Netherlands and Mozambique to expand exploration and production of fuel resources.

More than 100 of the high-value investments were destined for the US, with the UAE also being a favoured country with 76 commitments. Singapore followed closely behind with 73 deals, while the UK, the Netherlands and Mauritius were also among the preferred destinations. In terms of value, Singapore ($8.3 billion), Netherlands ($4.5 billion), Mauritius ($4.4 billion), US ($4.2 billion), and UAE ($3.3 billion) received the highest commitments.

Financial, insurance and business services sectors, which include IT companies, displayed the highest interest overseas, accounting for about $11 billion or half of the high-value ODI. Over $5.3 billion went into manufacturing, with the rest going into varied sectors of trade and travel, mining, transport, and construction.

India’s investment outflows have fluctuated around a low number for over a decade, rising modestly from $13.4 billion in 2013-14 to $14.3 billion in 2023-24. Thus, the recent surge is a welcome shift that seems to reflect the increased maturity of Indian companies and their rising appetite to expand abroad for new markets, technology acquisitions and opportunities in global value chains.

While large corporations dominate in scale, the bulk of smaller commitments below $10 million show that mid-tier and smaller firms too are testing global waters.

Trade tensions have added to the momentum. Data for April and May 2025 indicates that the pace of ODI has not slackened. In fact, outward investments have become a compelling business strategy for companies that wish to retain their market share in the US, which has imposed high tariffs on India. While businesses may be exploring how to expand their investments in other countries that face lower US tariffs than India, this is not reflected in data as of now.

As the economy expands, Indian companies must increasingly venture beyond domestic shores, even within an atmosphere of volatility and unpredictable policy changes. Liberalisation of ODI policies in 2022 and the new RBI definition of strategic sectors in energy, natural resources and startups have encouraged outward flows. The government has also expanded its own exploration and investments in foreign resource assets.

India must avoid perceiving ODI as a threat to domestic investment. Both can and must grow together, with appropriate policy frameworks.  In venturing abroad, Indian companies are positioning themselves and the economy for a more integrated future.

*Views are personal.