Outward Direct Investment (ODI):

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April 19, 2024

Outward Direct Investment (ODI):

Why in News? India’s outward foreign direct investment (OFDI), or overseas direct investment, declined by 39 per cent to $28.64 billion in the year ended March 2024, amid uncertain global economic conditions.

In the year ended March 2023, outward FDI, which is represented by total financial commitment, stood at $46.96 billion, according to the RBI data.

Reason for decline:

  • The global economy being in a state of flux.
  • Dip in overseas direct investment last year was because overseas acquisitions by the Indian companies were also not very large.
What is an Outward Direct Investment (ODI)?

·  An outward direct investment (ODI) is a business strategy in which a domestic firm expands its operations to a foreign country.

·  ODI can take many different forms depending on the company. For example, some companies will make a green field investment, which is when a parent company creates a subsidiary in a foreign country.

·   A merger or acquisition can also occur in a foreign country (and so may be considered an outward direct investment).

·   Finally, a company may decide to expand an existing foreign facility as part of an ODI strategy. Employing ODI is a natural progression for firms if their domestic markets become saturated and better business opportunities are available abroad.

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Outward Direct Investment (ODI): | Vaid ICS Institute