Indian companies pursue more strategic overseas expansion despite dip in outbound investment

India’s outbound investment moderated in the second quarter of 2026, but companies are becoming increasingly strategic in their overseas expansion, with acquisitions, localisation and supply chain resilience driving investment decisions.

According to T&A Consulting’s latest India Outbound report based on the latest data from the Reserve Bank of India, total overseas direct investment (ODI) reached US$13.1 billion between April and June, down 10.5% compared with the exceptionally strong second quarter of 2025. However, investment remained around 85% higher than the same period in 2024, suggesting outbound investment has stabilised at a significantly higher level than in previous years.

While headline investment eased, the composition of outbound FDI shifted markedly. Outbound mergers and acquisitions surged from around US$4 billion in the first quarter to US$23 billion in Q2, while greenfield investment also strengthened as Indian companies sought to establish production, engineering and commercial operations closer to key markets.

Technology and life sciences emerged as the leading sectors for acquisitions, reflecting a growing emphasis on securing intellectual property, specialised expertise and established market positions rather than building capabilities organically.

Richa Mahajan, partner, investment attraction at T&A Consulting, said the latest figures point to a change in the nature of India’s overseas investment rather than any weakening in corporate appetite. “This trend is especially prominent across sectors such as technology and life sciences, reflecting companies’ preference for acquiring capabilities that would be time-consuming and costly to build independently,” she writes in the report’s foreword. “These investments are largely strategic-asset-seeking, allowing Indian companies to expand their portfolios and enter new markets through established operating platforms.”

North America regained its position as the leading destination for Indian outbound investment during the quarter, attracting US$4.25 billion, with the United States accounting for around 65% of investment into the region. The report attributes the shift partly to companies seeking to localise operations following recent trade uncertainty while strengthening access to customers, research capabilities and specialised talent.

Among the quarter’s largest transactions was Coforge’s US$3 billion acquisition of US-based technology company Encora, while pharmaceutical companies including Sun Pharma, Lupin and Aurobindo Pharma also completed significant overseas acquisitions to expand their international capabilities and market reach. Greenfield projects included new manufacturing facilities in Mexico by Hetero Labs and Wipro PARI, underlining the growing importance of localisation strategies.

The report suggests Indian companies are increasingly deploying capital directly into end markets rather than relying primarily on regional financial hubs. While Singapore remains important for headquarters and holding structures, more investment is flowing into locations where companies require manufacturing, engineering, distribution and customer-facing operations.

Mahajan said this evolution is changing the competitive landscape for investment promotion agencies. “Regions are competing not only through costs and incentives, but also through the quality of investor facilitation,” she writes. “Sector-specific information, site-selection assistance, introductions to stakeholders, regulatory guidance, talent support and coordinated concierge services can reduce the time and uncertainty involved in establishing an overseas operation.”

She added that the ability to demonstrate strong local value chains and coordinate support across government, industry and academia is becoming an increasingly important differentiator for locations seeking to convert investor interest into long-term projects. Looking ahead, the report concludes that the outlook for Indian outbound investment remains positive, although quarterly flows are likely to fluctuate depending on the timing and scale of individual transactions.