Facing the pangs of slowdown, India Inc appears to have restrained from overseas mergers and acquisitions as the country's foreign investment slipped by over 11 per cent during April-December 2008, says Reserve Bank.
"During the first nine months of 2008-09, 2,828 proposals amounting to $16,352 million were cleared for investments abroad in JVs (joint ventures) and WOSs (wholly owned subsidiaries), as against 1,595 proposals amounting to $18,437 million during the corresponding period of the previous year," the central bank said in its April Bulletin.
Even though the number of proposals recorded an increase of 77.3 per cent, amount invested by India Inc on overseas ventures dipped by over 11 per cent during the period.
There were a total of 2,828 proposals during the first nine months of 2008-09 against 1,595 proposals in the corresponding period previous year.
"During the quarter, October-December 2008, proposals amounting to $7,409 million were cleared for investments abroad in JVs and WOSs, as against $7,882 million during October-December 2007, the RBI said.
The October-December 2008 investment proposals pattern indicated equity share declining to 75.8 per cent of the investment against 82.1 per cent in the same period the previous year.
The April-December 2008 investment proposals indicated an increase in the share of equity and loans in the financing of investment proposals as equity accounted for 67.2 per cent, followed by loans --18.7 per cent and guarantees -- 14.1 per cent during April-December 2008.
As against this, during April-December 2007, equity constituted 61.4 per cent of the amount of proposals for investment, while guarantees and loans formed 31.4 per cent and 7.2 per cent, respectively.
Route-wise, during April-December 2008, 99.9 per cent of the proposals involving 99.8 per cent of the amount were through automatic route and remaining through approval route.
"Under approval route, in October 2008, approval was accorded to Gujarat State Petroleum Corporation for their oil exploration project in Australia", RBI said.
Indian residents are permitted to make investment in overseas JVs and WOs under automatic route and approval route. Under automatic route, all proposals are routed through designated authorised dealer banks and these do not require prior approval from the Reserve Bank.
Sectoral pattern pointed out that almost 96 per cent of the proposals cleared were for investments of $5 million and above in October-December 2008.
Sector-wise, 73 per cent of the proposals were in manufacturing, followed by non-financial services and trading and the balance were others.