India second-fastest growing investor in US: FICCI-E&Y

Corporate India's investments in the US have been on the rise since the global economic downturn and the country has swiftly emerged as the second-fastest growing investor in the US, according to a FICCI-Ernst & Young report released on Wednesday.

The report, 'Direct investments in the US by Indian enterprises', reveals that there has been a "pragmatic shift" in the US-India trade and investment relationship over the years. "India has matured from the largest export destination to emerge as the second-fastest growing investor in the US, after the United Arab Emirates."

In financial years 2008-09 and 2009-10, Indian companies made 536 outbound acquisitions globally, of which 105 were in the US. "During the first quarter of FY11, Indian companies completed 101 outbound acquisitions of which nearly one-fourth were in the US," the report says.

While India's outward FDI, after the economic downturn, has seen a decline from $16.20 billion to $10.30 billion, the US has emerged as a preferred destination - its share increased to 6.5 per cent in FY10 from 5.7 per cent in FY09 (even though the number of transactions declined by 37 per cent).

Information technology and IT-enabled services, pharmaceuticals and the manufacturing sector emerged as the most active over FY09, FY10 and the first quarter of FY11.

"With the largest proportion of the total number of deals, these sectors have collectively accounted for 60 per cent of the total deals over the last two years. IT/ITeS accounted for most of the growth, with more than 40 per cent of the total number of deals in FY09 and 54 per cent of the total number of deals in FY10. While manufacturing and pharmaceutical sector contributed around 10 per cent each in FY09 to the total number of deals, the percentage reduced to 2 per cent and  per cent respectively in FY10," the report says.