Mumbai: Overseas investment by Indian companies is set to increase by 15 per cent per annum over the next five years, says a new research.

India ''s share of global outward investment (FDI, mergers and acquisitions) has trebled over four years and outbound activity in 2006 alone increased by 26 per cent, according to a new study by Oxford Intelligence, Global Outbound FDI Potential of Indian Companies 2007.

The report forecasts India''s outbound investments to grow by an average 15 per cent over the next five years, adding that this year will see growth of 19 per cent on activity on 2006.

Some 95 per cent of the Indian companies interviewed had firm international expansion plans for 2007 and 2008. However, the destinations are still limited; London is the key beneficiary of Indian outward investment, taking one third of activity in the four years to 2006. Other ''hot spots'' of activity are the UAE and China. North America is now poised to emerge as a hot spot - with levels of activity trebling over the next five years.

North America is emerging as a ''hot spot'' for Indian investments, with levels of activity trebling over the next five years, it said.

"Although discussion about India today tends to focus on the growing tide of foreign companies looking to establish operations in the country through direct investment, joint ventures or through outsourcing, Indian companies today have a truly global vision and are becoming an increasingly important source of outbound investment," Michel Lemagnen, director, Oxford Intelligence research was quoted as saying in a press release.

Whilst M&A mega-deals such as Tata-Corus have captured global attention, Indian companies have become increasingly active in a wide range of FDI projects. IT/software, life sciences and business services (especially outsourcing ), where Indian companies are potentially genuine world leaders, have to date dominated that activity - but financial services, electronics, chemicals, plastics and the automotive industry all have significant unrealised potential, say the researchers.

"The country''s top companies are now in an extremely healthy position in terms of cash, profitability and financing capacity and their potential for international investment, through both M&As and FDI, for the next few years is extremely favourable," he added.

The removal in 2005 of key restrictions on Indian companies'' ability to expand internationally has helped trigger a sharp increase in overseas expansion, the report pointed out.