India’s outbound investments surge 67 pc in FY25, driven by ESG, GIFT City, global tax reforms: EY

NEW DELH: India’s outbound investments has jumped by 67.74 per cent to USD 41.6 billion in FY2024-25 from USD 24.8 billion in FY2023-24, as per a new EY report.

The number of transactions also rose by 15 per cent, signalling a sharp uptick in global confidence, states the report titled “India abroad: Navigating the global landscape for overseas investment – 2025”.

It highlights that Indian companies are focusing on Idiversification, prioritising environmental, social, and governance (ESG) aspects, and leveraging technology-led growth to drive their global expansion strategies. The EY report highlights sectoral impacts across IT, energy, pharma, automotive, and hospitality.

While intermediary jurisdictions like Singapore, the Netherlands, and Mauritius have long dominated outbound investment structuring, Indian companies are now broadening their horizons.

The report noted that the shift is being driven by changing global tax rules, tighter regulatory oversight, and evolving strategic priorities.

Countries like the UAE, Luxembourg, and Switzerland are gaining ground, offering a mix of favorable tax regimes, progressive regulatory frameworks, and alignment with India’s interests in sustainability, digital innovation, and trade expansion.

The UAE is seeing rising investor interest beyond its traditional role in energy, spurred by the India-UAE Comprehensive Economic Partnership Agreement (CEPA) and new opportunities in infrastructure and technology.

Meanwhile, Luxembourg’s strength in fund management and green finance, along with Switzerland’s IP-friendly environment and advanced infrastructure, are drawing attention as alternative gateways for Indian capital.

Environmental, social and governance (ESG) priorities are now integral to overseas investment decisions. From carbon pricing implications in the EU to supply chain due diligence in the US, companies are embedding sustainability into investment design to meet rising stakeholder expectations and regulatory benchmarks.

Indian companies are increasingly turning to GIFT City as a strategic gateway for outbound investments, with RBI data showing a 100 per cent surge (from 0.04 USD billion in 2022-23 to 0.81 USD billion in 2024-25 )over the past two years.

Positioned as a cost-effective holding and treasury jurisdiction, GIFT City offers Indian multinationals regulatory clarity, tax advantages, and operational efficiency, helping manage global investments while retaining place of effective management (POEM) and tax residency in India. (ANI)