India’s outward foreign direct investment continued the momentum of last fiscal year into the first quarter of FY26.
Overseas direct investment (ODI) outflows — investments by Indian companies abroad — doubled to $6.7 billion during April-June 2025 compared to $3.1 billion in the same quarter last year. In the immediately preceding quarter ended March 2025, the ODI flows were $10.3 billion.
Singapore, Mauritius, the US, the UAE and Germany were the top five destinations for the outward FDI flows in the quarter with these countries receiving 75 per cent of the investments. Analysts note that the business-friendly rules, international banking facilities and their positioning of a global financial hub prompt companies to route their investments in subsidiaries for new projects through these destinations.
ODI outflows comprise those in the nature of equity investment, loans to subsidiaries and financial guarantees invoked by subsidiaries on the parent. However, 64 per cent of the ODI outflows in Q1 FY26 were in the nature of equity, data showed.
The total ODI commitments made by Indian companies during the quarter (equity, loans and guarantees issued) came in at $14.6 billion, also double when compared to $7.3 billion in year-ago period.
Domestic investment
Investment avenues in the domestic arena still remain low, and Indian companies are finding better opportunities in investing in expansion of their subsidiaries or new projects globally, Madan Sabnavis, chief economist, Bank of Baroda, said. The increase of guarantees suggests that their subsidiaries are also able to ride on the parent’s track record to raise more debt for expansion, he added.
Tata Communications, Aster DM Healthcare, Bharti Airtel, Samvardhana Motherson and JSW Neo Energy were the top five companies with highest ODI commitments in the quarter.
Analysis of ODI commitments of the top 10 companies showed that these largely included loans given to subsidiaries or guarantees issued to them for their borrowings. “The elevated ODI is mainly due to the reissuance of corporate guarantees for existing borrowings by our overseas subsidiaries along with some equity infusion undertaken to streamline our organisational structure,” Tata Communications said in a statement. Some key equity investments reflected in ODI include JSW Neo Energy’s acquisition of renewable energy platform from O2 Power and LIC’s fund infusion into its JV in Sri Lanka Life Insurance (Lanka) Ltd.
Richa Mahajan, Partner, T&A Consulting, said, “Indian firms are no longer passive players in the global economy and are “seeking growth opportunities, market access and partnerships abroad. It is an indication that Indian companies are seeking to acquire advanced capabilities and secure long-term footholds in strategic industries,” she added.
Published on July 22, 2025
