also be seen as a corporate strategy to promote the brand image and utilisation of raw materials available in the host country. in the indian context, overseas investments have been primarily driven by either resource seeking or market seeking or technology seeking motives. of late, there has been a surge in resource seeking overseas investments by indian companies, especially to acquire energy resources in australia, indonesia and africa. it is against this background that i intend to speak on recent trends and emerging issues in relation to indian outward fdi. i am thankful to bombay chamber of commerce for choosing this topical subject for today ’ s discussion. in my presentation, i would briefly talk about the evolution of outward fdi policy in india, trends and analysis of outward fdi, funding pattern of outward fdi, measures taken by the reserve bank of india and government of india, emerging issues and end with some thoughts on way forward. bis central bankers ’ speeches b. evolution of outward foreign investment policy in india change in policy environment across the economies has greatly influenced the outward investment pattern in the global economy. nonetheless, recognising the concerns of capital outflows, governments in different countries, particularly emerging and developing economies, have been relatively more circumspect on undertaking policy liberalisation of outward investment. therefore, it is important to highlight how the indian policy in this regard has evolved over time. in the indian context, overseas investments in joint ventures ( jv ) and wholly owned subsidiaries ( wos ) have been recognised as important channels for promoting global business by the indian entrepreneurs. the broad approach has been to facilitate outward foreign direct investment through joint ventures and wholly owned subsidiaries and provision of financial support to promote exports including project exports from india. with a steady rise in capital inflows, particularly in the second half of 2000s, the overall foreign exchange reserve position provided comfort to progressive relaxation of the capital controls and simplification of the procedures for outbound investments from india. three distinct overlapping phases as under can be discerned in the evolution of the indian outward fdi policies. phase i ( 1992 to 1995 ) : period of liberalization of indian economy guidelines on outward fdi were in place before the process of liberalisation and globalisation of indian economy in 1991 – 92. policy changes since 1992 were undertaken keeping in view the changing needs of a growing economy. understandably, the rules were quite restrictive and subject to conditions of no cash remittance and mandatory repatriation of dividend from the profits from the

many of the leading companies owe their competitiveness to the reform process. greater exposure to internal as well external competition proved to be instrumental in building confidence among the indian companies to compete with foreign competitors in world market. apart from liberalised policy environment for overseas investment, india has gained ground as an important investor on the back of ( a ) rapid economic growth, ( b ) easy access to neutrality refers to a condition that the amount of outward investment should be repatriated in full by way of dividend, royalty, etc. within a period of five years. an indian party is a company incorporated in india or a body created under an act of parliament or a partnership firm registered under the indian partnership act 1932 and any other entity in india as may be notified by the reserve bank. when more than one such company, body or entity makes investment in the foreign entity, such combination will also form an “ indian party ”. bis central bankers ’ speeches financial resources and ( c ) strong motivations to acquire resources and strategic assets abroad. one should not assume that overseas investment by indian companies is a phenomenon of 1990s. in fact, indian firms began to invest overseas in the 1960s, but india ’ s restrictive policies for overseas investment limited them to small, minority joint ventures in developing economies. first major overseas indian venture was a textile mill set up in ethiopia in 1959 by the birla group of companies ( authkorala, 2009 ) 3. overseas investment operations were, however, geographically concentrated in west and east africa, middle east, and south and east asia with which india shared a colonial heritage and historical linkages. sustained growth in indian overseas investment could be seen starting during 1970s when the industrial licensing system was more stringent. trend of outward investments during the past one decade a trend analysis shows that the level of outward fdi from india has increased manifold since 1999 – 2000. the level of net outward fdi flows ( on bop basis ), however, recorded a sharp uptrend at us $ 74. 3 billion during the second half of 2000s ( 2005 – 06 to 2009 – 10 ) as compared to us $ 8. 2 billion in the first half of 2000s ( 2000 – 01 to 2004 – 05 ). even though trend in india ’ s outward fdi was moderately affected during crisis year of 2009 – 10, a sharp rebound was seen in 2010 – 11 ( table 1 ). in recent years, outward fdi continued to be mainly financed through equity and loans. although guarantees issued