Singapore hot investment destination for India Inc

MUMBAI: Singapore has emerged as the top destination for overseas investment by Indian companies, with more than USD 10 billion parked there in April-December 2007- 08, up 13 per cent from year-ago levels, says a RBI report.

"Direction of investment indicates that 37 per cent of the approvals for outward FDI (of USD 5 million and above) were towards Singapore, followed by the Netherlands (26 per cent) and British Virgin Islands (8 per cent)," the report said.

According to the RBI report, India's overseas investment, which began initially with the acquisition of foreign companies in the information technology and related services sector, "has of late, spread to wider areas like manufacturing, financial and non-financial services."

The rise in both the numbers and the amount of approved proposals, the RBI said, "Is reflective of large overseas acquisition deals by Indian corporate facilitated by progressive liberalisation of the external sector policies."

The RBI report further said equity investment accounted for almost 90 per cent of the total outward investments, followed by loans and guarantees.

The outward FDI flow, which was USD 1.8 billion in 2004-05, increased to USD 4.9 billion the next year and more than doubled to USD 12.8 billion in 2006-07.

The trend has continued in 2007-08, with outward FDI increasing to more than USD 10 billion during (April-December 2007) compared to about USD 9 billion in the corresponding period in the previous year.