Census on Foreign Liabilities and Assets of Indian Direct Investment Companies
Today, the Reserve Bank released the provisional results of 2017-18 round of the annual census on foreign liabilities and assets (FLA) of Indian direct investment (DI) companies that have cross-border liabilities and assets arising on account of foreign direct investment (FDI) in India and/or overseas direct investment (ODI).
Of the 23,065 companies, which responded in the latest census round, 20,732 companies had FDI/ODI in their balance sheet in March 2018. Of these, 15,104 companies were common from the previous census round and 5,628 reported for the first time; 1,916 companies that reported in the previous round did not report in the latest round. At the aggregate level, foreign equity participation was very high as 84 per cent of the companies that reported inward FDI were subsidiaries of foreign companies (i.e., single foreign investor holding more than 50 per cent of total equity).
The census yields comprehensive information on the market value of foreign liabilities and assets of Indian companies arising on account of FDI, ODI, PI (portfolio investment) and other investments. It is important to note that changes in outstanding asset/liabilities would be different from flows recorded in the balance of payments (BoP) during a year, as the former would also include valuation changes due to price, exchange rate movements and other changes.
- Nearly 96 per cent of the DI companies were unlisted and had higher share of cross-border equity capital vis-à-vis listed companies; the share of ODI companies was relatively small (Tables 1 and 2A).
- Non-financial FDI companies accounted for over 95 per cent of all FDI companies and they reported higher foreign equity participation vis-a-vis financial FDI companies (Table 2B).
- FDI investment increased by ₹4,333 billion, including revaluation of past investments, during 2017-18 to reach ₹28,246 billion in March 2018 at market value; the market value of ODI, on the other hand, increased by ₹252 billion and stood at ₹5,280 billion. (Table 3)
- The ratio of inward to outward direct investment at market value increased to 5.3 per cent in March 2018 from 4.8 per cent a year ago. Equity participation accounted for 95 per cent of FDI and 76 per cent of ODI.
- FDI companies witnessed a substantial increase in other investment liabilities, largely due to the increase in trade credit (Table 4).
- Mauritius continued to be the largest source of FDI in India (19.7 per cent share at market value) followed by the USA, the UK, Singapore and Japan; in case of overseas investment by Indian companies, Singapore (17.5 per cent share at market value) was the major destination, followed by the Netherlands, Mauritius and the USA (Tables 5 and 6).
- Manufacturing sector had majority share in total FDI at market prices; ‘information and communication services’ and ‘financial and insurance activities’ were other major recipients of FDI (Tables 7 and 8).
- Total sales, including exports, of foreign subsidiaries in India increased by 11.8 per cent during 2017-18; the growth in purchase, including imports, was higher at 18.2 per cent (Tables 9A and 9B).
- 31 per cent of total sales of foreign subsidiaries in India were in terms of exports whereas the share of imports in their purchases stood higher at 38 per cent (Tables 9C and 9D).
- In case of overseas subsidiaries of Indian companies, exports accounted for 37 per cent of total sales during 2017-18, whereas imports had much higher share of 63 per cent in their total purchases (Table 10A and 10B).
- The purchase-to-sales ratio of overseas subsidiaries of Indian companies stood at 83.3 per cent vis-à-vis 63.2 per cent in case of foreign subsidiaries in India, indicating divergence in their activity focus areas and pattern of value addition (Table 10C and 10D).