Singapore has emerged as the most sought after destination for foreign direct investment by Indian companies, which invested over USD 500 million in May.

According to a study from industry body Assocham, of the total outward investment of USD 2.35 billion in May, Singapore accounted for about a fourth of the total outflows.

The US, the UK, Hong Kong, the UAE, the Philippines and Mauritius were the other favourite destinations.

While Mauritius remained the top source of FDI into India, it was not the same in case of outflows to that country, said the study.

Of the 467 companies which invested abroad, only 24 preferred Mauritius, which is a haven for corporates wanting to bring in FDI because of the India-Mauritius Double Taxation Avoidance Agreement, it said.

Since the island nation has zero capital gains, it makes sense for the inward FDI from there, rather than outward FDI for India, said the Assocham study.

About 138 companies invested in manufacturing followed by services.

In the services sector, close to 100 Indian companies put their money in foreign ventures.

As many as 68 domestic firms invested abroad in sectors such as wholesale, retail, hotels and restaurants. India, meanwhile, is yet to open the multi-brand retail to FDI.

“This is certainly a pointer to us. It would not be possible for India to keep its doors shut for the FDI in retail which is a very vibrant sector of the economy. It gives multiplier results to the employment generation rather than taking away the existing jobs, as is being made out,” said Assocham president Rajkumar Dhoot.

The industry body said cheaper assets available at attractive valuations could be one of the plausible reasons for a vibrant outward FDI.

In services sector, healthcare, information technology and asset management are seen as prominent areas of interest, said the study.