Inward ground, outward bound

A few weeks ago, Sunil Bharti Mittal, founder and chairperson of telecom major Bharti Enterprises and president of the Confederation of Indian Industry (CII) at the time, stepped on stage at a gathering of India's top industrialists and government officials, and spoke his mind.
While a lot of what he said was to exhort his fellow corporate leaders — listening with rapt attention in a vast packed hall in Delhi's Taj Palace hotel — to do better, a sizeable portion was aimed at the government and how it could make doing business in India easier.
Mittal's comments — at the gathering of India's 130-year-old business association — came at a significant moment. The Department of Economic Affairs of the Ministry of Finance had, just a few days earlier, noted that corporate India's increased investments abroad, at a time when it was turning cautious about investing within India, was something that 'warrants attention'.
'Industry will do everything possible to generate more employment, spend more on research and development, create import substitution, and expand its export basket. But we need your (the government's) help. We need enabling policies, especially in the area of ease of doing business,' Mittal emphasised.
This kind of help from the government, he added, could be in corporate affairs, the easing of processes surrounding the listing of companies, and floating bonds in the international market. He also drew attention to costly and time-consuming litigation.
'There are lakhs and lakhs of crores stuck in litigation in direct taxes, indirect taxes, and other regulatory matters,' Mittal lamented, adding that the government should come up with a scheme like 'Vivad se Vishwas', which provides dispute resolution with respect to pending income tax litigation, for corporates as well.
The scheme by the Ministry of Finance is currently aimed at individual taxpayers. It allows them to pay a certain portion of the tax amount that is currently in litigation and have the rest of the dues waived.
'The government will get very large amounts of money released by such a scheme (for corporates),' Mittal asserted. 'More money in the hands of the government today will give the necessary desired fillip to infrastructure and the various social programmes that are vitally needed and, importantly, release the industry from its past litigations and problems and allow it to reset and look into the future,' he said.
It is this future of corporate investments in India that has come into question recently. The latest data from the Reserve Bank of India (RBI) show that outward investment by Indian companies has risen sharply over the last decade or so — from $4 billion in 2014-15 to more than triple that amount ($13 billion) just before the outbreak of the COVID-19 pandemic in 2020.
Although this outward direct investment (ODI) dipped in the pandemic-affected year, 2020-21, it surged again thereafter, reaching $29 billion by 2024-25. To put this in context, while Indian investments abroad jumped by nearly 625% since 2014-15, foreign investments coming into the country grew by 79% since then.
This trend continues in 2025-26, with data for April showing outward investment surging to $6.8 billion, exceeding the entire year's investment in 2014-15, and marking a significant increase from $3.5 billion in April last year.
Big pull factors
So, is this a push factor: where conditions in India are pushing companies to invest elsewhere? Or a pull factor: where opportunities abroad are so enticing that Indian companies can't help but take advantage of them? The answer depends on whom you pose the question to. Opportunities abroad, the need to acquire resources, and gaining access to technology and know-how are motivations for Indian companies.
'In recent times, we have had a lot of economic diplomacy,' says Delhi-based Ranjeet Mehta, CEO and secretary general of the PHD Chamber of Commerce and Industry. 'India is an emerging economic power. Today, it is the fourth-largest economy in the world and our companies are also growing bigger. In this process, Indian companies are globalising for market diversification.'
The second reason for Indian companies to invest abroad, he explains, is resource acquisition. This is something that has now acquired a certain urgency, with China in April banning the export of critical minerals and rare earths as part of its trade tiff with the U.S. Resources are important for technology-related products, including electronics and batteries.
'There was a time when China was growing strongly and it acquired critical minerals in various parts of the world. Today, it is reaping the benefits,' Mehta says. 'If we do not have companies that are truly global, how can India hope to be a global power or, for that matter, truly 'Viksit (Developed)'?' He says only companies that have grown to a certain size and scale within India are thinking of acquiring foreign assets and expanding further. RBI data confirm this. For example, in 2024-25, Tata Steel invested $3 billion in its financial services subsidiary in Singapore, accounting for about 10% of all the outward corporate investment from India that year.
Vedanta Limited, another multi-billion dollar company, with mines across India, was the second-largest outward investor, pumping $1.7 billion into its financial services subsidiary in Mauritius and manufacturing subsidiary in Saudi Arabia. In fact, Mauritius has seen the fourth-largest ODI from India (8%) from April 2023 to May 2025, as per the Department of Economic Affairs data. Singapore was the top destination (24%), followed by the U.S. (14%), and the UAE (9%).
Other companies investing abroad include automotive components manufacturer Samvardhana Motherson International, earlier called Motherson Sumi; petroleum refining Bharat Petroresources, a subsidiary of Bharat Petroleum Corporation Limited; the biopharmaceutical Biocon Biologics; and Sun Pharmaceutical Industries — all multi-billion dollar corporations.
Sector-specific gains
There are also sector-specific factors that encourage Indian companies to look abroad. 'In the auto components sector, many companies have invested abroad,' Vinod Sharma, Noida-based chairperson of CII's National Committee on Electronics Manufacturing, explains. 'The industry works in that manner. If Volvo, for example, sets up a plant in a particular country, then the auto ancillary sector will move there too. If you see an opportunity, you go there.'
RBI data show that transport, storage, and communication services together accounted for $2.3 billion of all ODI in 2024-25, placing it in the top five sectors in which Indian companies invested abroad. The top spot went to financial services, which accounted for $16.5 billion of ODI. Manufacturing — which includes auto ancillaries — took the second spot with $10.1 billion of ODI.
Sharma adds yet another pull factor to the mix: that of Indian companies being wooed to take over ailing foreign ones. 'Some foreign companies may have gone bankrupt or not done very well. This is where an opportunity arises for Indian companies to make their move,' he explains. 'That country's government says this land and building are available, and invites other companies to come and invest. This is a case where a foreign investment becomes opportunistic as you are getting these assets at a cheaper price.'
According to both Sharma and Mehta, the pull factors from abroad were the more important drivers of outward investment by Indian companies than the push factors from within India.
'I don't think that they are seeing that opportunities in India are limited and that's why they have to go abroad,' Sharma points out. 'Of course, there are places that are easier to do business in than India, but the Indian companies that are investing abroad have been operating here for a long time and are used to the system here.'
The government, too, is of the opinion that greater foreign investment by Indian companies is an indicator of their increasingly global ambitions. 'The greater outward direct investment over the past few years demonstrates that Indian industry also realises that they have to grow and that if they need to scale up, they need to acquire technology, resources, and gain greater market access in other countries,' Amardeep Singh Bhatia, Secretary, Department for Promotion of Industry and Internal Trade, said while speaking at a business summit a few weeks ago. 'The greater ODI flows are an indicator of what is happening on account of that,' he said.
Pushed to invest
Not everybody is as sanguine about the situation in India. In a plush office in a high-rise corporate building in Noida, a senior executive of a multinational corporation laments that manufacturing in India is difficult and 'needlessly costly'.
'Look, it's not easy doing business here,' he says. 'Yes, things are getting better, but progress is slow. It is very difficult to scale up factories here, since buying land is very difficult. If you can't scale up, then you have to face higher costs,' he adds, not wishing to be named. He also points out that India's labour laws are 'extremely restrictive', which makes it more economical for companies to open several small factories in different States rather than a single large one.
He agrees with Mittal about long litigation dampening business enthusiasm. 'Then there's tax-related harassment,' he says, with his voice dropping inadvertently to a slightly hushed tone. 'There's almost no company in India that is safe. You never know when a tax demand will come, and then you have to spend lakhs and sometimes crores fighting the case for years. Companies that have no choice will of course continue to do business here. But for those that can expand abroad, why would they not?'
Separately, Anil Trigunayat, president of the Millennial India International Chamber of Commerce Industry and Agriculture, which works as a bridge between industry and the government, adds that investment goes where there is security and scope of good returns.
'While India has done extremely well in undertaking significant economic and legal reforms and its rankings in the Ease of Doing Business Index has improved greatly, archaic laws, retrospective implementation in some cases, taxation issues, land and labour laws, and bureaucratic hurdles are often cited as wrinkles in an otherwise promising landscape,' he explains.
Trigunayat wants to see India in the top 10 in the Doing Business rankings, brought out by the World Bank since 2003. He hopes for economic reforms and robust arbitration mechanisms.
sharad.raghavan@thehindu.co.in
Edited by Sunalini Mathew

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