Turning Tides: India Transforming from Popular Offshore Destination to Notable Job Creator In the U.S.

The Confederation of Indian Industry (CII) every year holds a survey of Indian companies that are operating in the U.S. to examine their growing presence. However, this year the CII report titled, “Indian roots, American Soil” for the first time captured a state-by-state breakdown of the investments made and job opportunities created by 100 Indian companies that have their business operation in the U.S. According to the report, Indian companies have made tangible investments worth US$15.3 billion in the U.S. These 100 Indian firms were also responsible for creating around 91,000 jobs in the U.S.

Indian Investment Scenario: Shrinking FDI from the U.S., Rising FDI into the U.S.

Several countries in Asia Pacific are popular destinations for FDI. This is the case because many countries in this region offer high-speed manufacturing and other services at low costs. However, this scenario is going through a metamorphosis. This change is not a drastic one, but a gradual one. According to reports, the FDI from the U.S. in India has shrunk in the recent years to approximately US$800 million in the year ended March 31, 2015.

The Prime Minister of India, Narendra Modi on his visit to the U.S., aimed to revive the investment interest of the U.S. firms in India. On the contrary, the CII report concludes that the number of FDI initiatives from companies of Indian origin are increasingly gaining a foothold in the U.S. soil. According to the report, the highest beneficiaries of the Indian FDI were Texas (US$3.84 billion), Pennsylvania (US$3.56 billion), Minnesota (US$1.8 billion), New York (US$ 1.01 billion), and New Jersey (US$1 billion).

Indian IT Companies at the Forefront of FDI in the U.S.

Telecom, IT, and IT-es sector dominated with 40% FDI investment in the U.S, followed by the life sciences, healthcare, and pharmaceuticals sector and the mining, materials, and manufacturing sector. Other Indian sectors that are investing in the U.S. through FDI are financial services, media and entertainment, automotive, food and agriculture, energy, design, engineering, and construction, and others.

Let us take a look at some recent examples of FDI initiatives undertaken by Indian firms in the U.S.:

• The Tata Group invested more than US$3 billion in the U.S. and currently employs around 19,000 in the U.S.
• Crompton Greaves, part of the Avantha Group invested and partnered on a US$20 million deal to launch a center with University of Albany.
• Jubiliant Organsys Total Capital invested around US$250 million in the U.S. and presently employs around 900 in the U.S.

The Indian investment scene has spread throughout the U.S. and reached states on both coasts and also in the American mid-west region. Geographically diversified investment by Indian companies is supporting employment in the U.S., especially in towns that are reliant on manufacturing and are experiencing challenges amidst the recent economic downturn.

These investments from Indian firms are projected to continue in the foreseeable future. Besides the IT sector, a strong interest by Indian investors in metal and mining and healthcare industries is expected to drive the FDI landscape from India to the U.S. The rising number of FDI initiatives are also expected to renew India-U.S. ties. The substantial and rising contribution of Indian firms in the U.S. soil will further drive the bilateral economic relations between the two countries, concludes the CII report.