A review conducted on India?s outward investment in joint ventures (JV) and wholly-owned subsidiaries (WOS) outside India, during the quarter July-September 2008, revealed 1,180 proposals were cleared in both JVs and WOS amounting to $5,621 million, as against 452 proposals amounting to $4,217 million, in July-September 2007.
The number of proposals recorded a sharp increase of 161.1%, while the magnitude of investment proposals showed a rise of 33.3% during the quarter.
Equity accounted for 51.6% of the investment, followed by loans at 29.1% and guarantees at 19.4%, during July-September, 2008. However, during the corresponding quarter of the previous year, July-September 2007, equity constituted 74.3% of the proposals for investment, while guarantees and loans formed 13.8% and 12%, respectively. Thus, in the second quarter of 2008-09, the share of equity in total investments proposals declined, while those of loans and guarantees showed an increase, as per the Reserve Bank of India study released on Wednesday.
During July-September 2008, all the proposals were cleared through automatic route and none through approval route. Against this, during July-September 2007, 99.8% of the proposals involving 90.9% amount were through automatic route, while the rest were through the approval route.
Meanwhile, during April-September 2008, 99.9% of the proposals involving 99.6% of the amount were through automatic route and the remaining 0.1% of the proposals involving 0.4% of the amount was through approval route. Under automatic route, equity occupied 59.9% of the investment proposals, whereas under approval route, all the proposals were through equity only. During April-September 2007, 99.5% of the proposals involving 96.3% amount were through automatic route, while the balance 0.5% of the proposals involving 3.7% amount were through the approval route.
Considering the sectoral pattern, during July-September 2008, almost 94% of the total outward FDI proposals of $5 million and above cleared were for investments.
Sector-wise, 46% of the proposals were in manufacturing, followed by non-financial services at 10%, trading at 2% and the balance was ?others?. Comparing the corresponding quarter of the previous year, 63% of the proposals were in manufacturing sector, followed by non-financial services at 25%, trading at 2% and the rest being ?others?. Within the manufacturing sector, proposals were mainly in the areas like construction, software development, drugs, telecom products and textiles. Proposals in trading covered activities, such as real estate development and mining. Investment proposals in non-financial services included activities, such as education. The category of ?others? comprised activities such as, consultancy, oil exploration, shipping, stock-broking and IT-enabled services.
Money-wise
• During the July-September 2008 quarter, 1,180 proposals were cleared in both JVs and WOS amounting to $5,621 million, as against 452 proposals amounting to $4,217 million, in July-September 2007
• The number of proposals recorded a sharp increase of 161.1%, while the magnitude of investment proposals showed a rise of 33.3%
• Equity accounted for 51.6% of the investment, followed by loans at 29.1% and guarantees at 19.4%, during July-September, 2008
