Economists also say that as decision-making slows down in India in the wake of high profile corruption scandals, many businesses prefer to invest in what they call more "predictable" markets. A survey by the Federation of Indian Chambers of Commerce and Industry suggests that business confidence in India has plunged due to high interest rates, frustration with governance and problems with issues such as land acquisition.

However, economist Joshi warns that the pace of overseas investments may slow down in the coming months due to concerns of another recession in Western countries.

"I think the companies will try to preserve cash, because their margins are already coming under pressure, and I think there is also a fear that if the global economy crashes again, then I think there will be a credit freeze and you will require money," Joshi added. "So everybody is in a cautious mode right now, so they are likely to go a bit slow in their global acquisitions unless the dust settles on the global environment once again."

Meanwhile, the government says it wants to speed up the pace of economic reforms in such areas as labor laws and land acquisition to encourage Indian companies to invest more money at home.