India’s Outbound Investments Rise 67% in FY25

India’s outbound investment landscape witnessed a dramatic transformation in FY2024–25, with a 67.74% surge in foreign investments by Indian companies, reaching USD 41.6 billion, up from USD 24.8 billion in the previous fiscal. According to EY’s latest report titled “India Abroad: Navigating the Global Landscape for Overseas Investment – 2025,” this surge reflects the convergence of ESG imperatives, GIFT City reforms, and global tax realignments, reshaping how Indian firms pursue international growth.

What’s Fueling the Investment Surge?

Focus on ESG and Strategic Diversification

Indian corporations are now embedding environmental, social, and governance (ESG) principles into their overseas expansion strategies. Rising global expectations, regulatory pressure—like carbon pricing in the EU and supply chain audits in the US—and stakeholder demands have made sustainability a central investment criterion.

Sectors seeing strong outbound momentum include,

• Information Technology
• Energy and Green Tech
• Pharmaceuticals
• Automotive and Mobility
• Hospitality and Lifestyle Infrastructure

These investments also mirror India’s ambitions to position itself as a global innovation and sustainability leader.

Rise of GIFT City as a Gateway

India’s financial hub, GIFT City, has emerged as a preferred jurisdiction for outbound investment structuring. RBI data reveals a 100% growth in investments through GIFT City—rising from USD 0.04 billion in FY23 to USD 0.81 billion in FY25.

GIFT City provides,

• Tax-efficient structures
• Regulatory transparency
• Operational and cost advantages
• Control over POEM (Place of Effective Management)

This enables Indian companies to retain tax residency in India while managing global capital flows more efficiently.

Changing Jurisdictions and Investment Routes

New Investment Destinations

Traditional intermediary hubs like Singapore, Mauritius, and the Netherlands are gradually being complemented by new destinations due to evolving tax laws and strategic shifts. Emerging hotspots include:

• UAE: Benefiting from the India-UAE CEPA, with growing interest beyond energy into infrastructure, fintech, and digital technologies
• Luxembourg: A leader in fund management and green finance, ideal for ESG-aligned investments
• Switzerland: Known for IP rights protection and advanced legal-financial infrastructure

These destinations offer tax efficiency, regulatory stability, and sector-specific advantages aligned with India’s evolving investment objectives.

Global Tax Reforms and Regulatory Pressures

Navigating the Post-BEPS Landscape

The global shift towards Base Erosion and Profit Shifting (BEPS) 2.0 and the OECD’s global minimum tax framework is influencing how companies structure outbound deals. Tighter enforcement of substance-based taxation and economic presence norms is pushing Indian companies to adopt more transparent and sustainable routes for international expansion.

Rise in Transactions

Alongside the jump in investment value, the number of outbound transactions rose by 15%, signaling increased confidence in cross-border activity, even amid global economic uncertainties.