RBI curbs impact India's foreign investment, slips to $1.94 bn

Mumbai: Overseas investment by Indian companies declined sharply to $1.94 billion in August, amid the Reserve Bank tightening norms for outbound investments by the domestic firms to contain rupee slide.

A month ago in July, the Indian firms had invested $3.24 billion in their various entities overseas.

Of the total investment made abroad in August, $1.41 billion was through guarantee issued, $381.37 million via loans and investment of $144.71 million was made through equity.[caption id=“attachment_1112783” align=“alignleft” width=“380”]  A US dollar. Getty Images[/caption]

The RBI in mid-August took sharp measures in a bid to save rupee from a free-fall and put curbs on Indian firms investing abroad besides reducing outward remittances.

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Bharti Airtel, Tata Power Company, Financial Technologies, Essar Constructions Overseas and Reliance Industries were among the major investors that invested in their overseas units during the month.

Bharti Airtel invested $186 million in two separte tranches in its joint-venture and wholly owned subsidiaries in the Netherlands and Singapore respectively.

Tata Power Company invested $107.3 million in two separate tranches in its wholly-owned units in Mauritius and Singapore.

Jignesh Shah promoted Financial Technologies made a total investment of $107 million in two different tranches in its wholly owned subsidiaries in Singapore and Mauritius.

Essar Constructions Overseas invested $110 million in its wholly-owned unit in Mauritius. Glenmark Pharmaceuticals made investment of $73.52 million in four different tranches in its wholly owned and joint-venture units in Egypt, Mexico, Switzerland and Venezuela.

Mukesh Ambani’s Reliance Industries invested $66.1 million in its wholly owned company in the Netherlands, while Bharat Petroresources invested $65.77 million in a wholly-owned unit in the Netherlands.

Among the steps taken last month, the RBI had reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under the automatic route from 400 per cent of net worth to 100 percent.

Oil India and ONGC Videsh were exempted from the curbs.

Also, it reduced the limit for remittances made by resident individuals under the liberalised remittances scheme (LRS) from $2 lakh to $75,000 a year.

PTI