Vaibhav Luthra, Tax Partner, EY India said, “India’s global investors are no longer just chasing scale, they are looking for strategic, resilient growth. As outbound capital becomes more ESG-sensitive and substance focused, aligning operating models with local expectations is non-negotiable. The right mix of foresight, flexibility and financial structuring will be the differentiator.”
India’s outbound investments jumped by 67.74% to US$41.6 billion in FY2024-25 from US$24.8 billion in FY2023-24, as per EY’s new report “India abroad: Navigating the global landscape for overseas investment – 2025.”
The number of transactions also rose by 15%, signaling a sharp uptick in global confidence.
Indian companies are focusing on diversification, ESG priorities, and technology-led growth to drive their global expansion strategies. The report highlights sectoral impacts across IT, energy, pharma, automotive, and hospitality.
Key trends shaping India’s outbound investment agenda:
Beyond Singapore and Mauritius: New gateways for Indian capital: While intermediary jurisdictions like Singapore, the Netherlands, and Mauritius have long dominated outbound investment structuring, Indian companies are now broadening their horizons. 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.
ESG becomes a deciding factor in global investments: 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.
GIFT City rises as a preferred hub for outbound investment: Indian companies are increasingly turning to GIFT City as a strategic gateway for outbound investments, with RBI data showing a 100% surge (from 0.04 US $ billion in 2022-23 to 0.81 US $ 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.
Global policy developments: Strategic reorientation is also being catalyzed by a dynamic global policy environment. With announcements of US tariff revisions under the ‘One Big Beautiful Bill,’ scrutiny under OECD BEPS Pillar reforms, and sustainability-linked trade measures are adding layers of complexity to cross-border operations. These developments are strategic signals that necessitate a decisive pivot in outbound direct investment strategies.
Vaibhav Luthra, Tax Partner, EY India said, “India’s global investors are no longer just chasing scale, they are looking for strategic, resilient growth. As outbound capital becomes more ESG-sensitive and substance focused, aligning operating models with local expectations is non-negotiable. The right mix of foresight, flexibility and financial structuring will be the differentiator.”
To remain future-ready, EY recommends that Indian multinational enterprises (MNEs) adopt a forward-looking, compliance-first mindset. A multi-dimensional strategic response will be key to sustaining competitiveness and ensuring resilient global growth.
EY recommends the following strategies for businesses investing abroad:
Reassess existing investment and operating models: Align holding structures, outbound flows, and tax strategies with global reforms like BEPS Pillar 2, while ensuring transparency and compliance with substance requirements.
Evaluate supply-chain agility: With developments such as expected revision in US tariffs and the India-UK FTA, Indian MNEs must review indirect tax exposures, assess fiscal incentives, and build in resilience through alternate trade corridors.
Embed ESG into capital planning: As ESG imperatives like CBAM and CSRDbecome embedded in global regulation and investor expectations, Indian businesses are advancing from basic compliance to leveraging ESG as a core value driver.
Review international structuring regularly: Periodic review of global investment and operational structures is essential to stay aligned with commercial goals and regulatory expectations.
Diversify export markets: Reduce dependency on carbon-sensitive jurisdictions by identifying new opportunities in emerging economies and favorable trade blocs.
Leverage GIFT City’s advantages: As Indian MNEs explore cost-effective, compliant global expansion, GIFT City is emerging as a preferred location for setting up holding companies and treasury operations. With its favorable tax regime, regulatory alignment, and ability to retain Indian tax residency (POEM), GIFT City offers an attractive platform for strategic structuring.
Strengthening compliance with BEPS and substance norms: With the advent of global tax initiatives such as OECD BEPS Pillar 2 and local substance requirements, Indian MNEs must consider restructuring their overseas entities and functions to align with substance requirements and demonstrate genuine economic activity in tax-favorable jurisdictions.
Ensuring compliance with minimum global tax standards and robust substance requirements is now imperative not only to meet transparency expectations, but also to safeguard long-term competitiveness and optimizing exposure to regulatory scrutiny.
By embracing these measures, Indian enterprises can proactively navigate regulatory complexity, capitalize on international opportunities, and drive long-term sustainable value creation.