h r khan : outward indian fdi – recent trends & emerging issues address by shri h r khan, deputy governor of the reserve bank of india, at the bombay chamber of commerce & industry, mumbai, 2 march 2012. * * * the speaker acknowledges the contributions of shri. r. rajagopalan, shri. rajan goyal, shri, rajeev jain and shri. surajit bose, reserve bank of india. in recent years, emerging market economies ( emes ) are increasingly becoming a source of foreign investment for rest of the world. it is not only a sign of their increasing participation in the global economy but also of their increasing competence. more importantly, a growing impetus for change today is coming from developing countries and economies in transition, where a number of private as well as state - owned enterprises are increasingly undertaking outward expansion through foreign direct investments ( fdi ). companies are expanding their business operations by investing overseas with a view to acquiring a regional and global reach. a. factors providing momentum to outward foreign investments according to unctad ’ s world investment report 2011, the stock of outward fdi from developing economies reached us $ 3. 1 trillion in 2010 ( 15. 3 per cent of global outward fdi stock ), up from us $ 857 billion ( 10. 8 per cent of global outward fdi stock ) 10 years ago. on flow basis, outward fdi from developing economies has grown from us $ 122 billion in 2005 to us $ 328 billion in 2010 accounting for around a quarter of total outward fdi witnessed at global level. fdi is a natural extension of globalisation process that often begins with exports. in the process, countries try to access markets or resources and gradually reduce the cost of production and transaction by expanding overseas manufacturing operations in countries where certain ownership - specific advantages can help them to compete globally. adoption of such strategies helps them to catch up with competing economies. a significant uptrend in outward fdi has also been observed in the case of india in recent years. since globalisation is a two - way process, integration of the indian economy with the rest of the world is evident not only in terms of higher level of fdi inflows but also in terms of increasing level of fdi outflows. the overseas investment of domestic corporate sector through fdi has provided them better access to global networks and markets, transfer of technology and skills and also enables them to share research and development efforts and outcomes. it can

the next phase of cci. 2 / 5 bis central bankers'speeches first, unlocking private sector financing for infrastructure projects ; second, expanding the role of capital markets in financing growth ; third, developing risk management solutions to support investment ; and fourth, strengthening financial capabilities and mutual learning. unlocking private sector financing for infrastructure projects first, private sector financing for infrastructure projects, especially in the context of the belt and road initiative. the cci can serve as a key priority demonstration project to operationalise the belt and road initiative. the belt and road initiative is breath - taking in its strategic vision. at one level, it is about promoting economic growth in the countries of asia through infrastructure development. the asian development bank estimates that developing asian countries will need to invest us $ 1. 7 trillion annually in infrastructure until 2030 to maintain their growth momentum. but at a deeper level, the belt and road initiative is about bringing together the countries of asia through greater connectivity – deeper links of transport and communications, stronger flows of trade and investment, greater movement of people and ideas. the belt and road ’ s potential scope for connectivity is perhaps unmatched in human history. as an international financial centre in the heart of asia, singapore can play a useful role in financing and advancing belt and road projects, particularly in southeast asia. chinese banks in singapore have committed more than rmb 500 billion ( usd 73. 4 billion ) in financing singaporean companies involved in belt and road projects, including the issuance of project bonds. china construction bank singapore branch issued rmb 1 billion ( usd 145 million ) of belt and road initiative bonds in august last year. and in may this year, bank of china singapore branch issued belt and road initiative bonds worth rmb 4 billion ( usd 600 million ). expanding the role of capital markets in financing growth second, the cci has embarked on a demonstrative project to expand the role of our capital markets. this complements the role of banks in financing growth and development. specifically, we should facilitate the participation of institutional investors in development projects. why? china has many public - private partnership ( ppp ) projects, where the state and companies involved own and operate infrastructure assets. in chongqing itself, rmb 800 billion worth of ppp projects are expected to be in the pipeline between 2015 and 2020. but infrastructure assets are illiquid by nature. the capital invested is locked up and not available for use in other development projects. 3 / 5 bis central bankers