With land frustratingly hard to get at home, India’s largest rubber producer decided to make its next investment – and its first overseas – a continent away, in Africa.

Harrisons Malayalam, which is also a major tea grower, is joining a surge in outbound investment by corporate India. It plans to spend up to $112-million (U.S.) somewhere in Africa to buy about 10,000 acres.

The overseas investment push by Indian companies, often seen as the assertiveness of a rising power, is increasingly spurred by difficulty finding attractive opportunities in Asia’s third-largest economy.

“Plantation land in India is very scarce and the competition is intense for the little that is available,” said Harrisons Malayalam managing director Pankaj Kapoor. “So all the plantation companies are looking at Africa where it is still available and cheap.”

At home, rising interest rates and inflation, fierce competition in several industries, and policy gridlock amid a spate of corruption scandals that have put India’s government on the defensive have deterred investment, slowing economic growth and prompting many Indian firms to seek opportunity elsewhere.

While doing business abroad diversifies risk and opens new markets, the export of capital even as inflows slow deprives the Indian economy of investment that could add capacity and ease bottlenecks that drive inflation and crimp growth.

India Inc.’s increasingly global focus also makes it harder for equity investors to gain exposure directly to the country’s consumption-driven growth, with roughly one-third to half of revenue generated by firms in the 50-share Nifty index coming from overseas, even though exports account for just 18 per cent of India’s economy.

“Despite India’s vast opportunities across under-penetrated sectors, companies are venturing abroad for inorganic growth,” HDFC Securities analyst Anupam Gupta wrote in a recent report.

“While this is also partly driven by rising global aspirations for Indian companies, another reason for this is a tough competitive field, made no easier by the unpredictable regulatory environment,” he wrote.

Foreign direct investment (FDI) by Indian firms more than doubled in the fiscal year that ended in March to $44-billion.

At the same time, inbound FDI fell by a quarter to $19.4-billion, with planned multibillion-dollar investments by South Korean steelmaker Posco and London-listed India-focused miner Vedanta Resources plagued by delays.

Within India, investment was flat on an annual basis in January to March after growing 7.8 per cent in the previous quarter.

Indian firms have made several big-ticket overseas buys in recent years, and the huge Reliance Industries Ltd. and Tata conglomerates earn more than half their revenue abroad. However, the recent mismatch in inbound and outbound investment suggests push factors are increasingly at play.

“To a certain extent there is a perception within the private sector of policy drift domestically,” said Frank Hancock, managing director for advisory at Barclays in India.

“As a result some corporates are factoring in a higher degree of political risk for making investments at home than abroad,” said Mr. Hancock, who advised Indian mobile giant Bharti Airtel in its $9-billion purchase last year of most of Kuwait-based Zain’s African operations.

With an economy growing around 8 per cent a year, 1.2 billion people and unmet demand for everything from housing, roads and power to food and consumer goods, India is hungry for capital.

Conditions on the ground, however, can make it hard to put money to work.

The fast-growing telecoms sector is beset by uncertainty stemming from a massive licensing scandal that has seen several executives held in jail and put the government of Prime Minister Manmohan Singh on the back foot over its handling of corruption.

Already, telecom was ferociously competitive.

“What does Bharti’s move into Africa tell you? It tells you that the Indian market is saturated probably,” said David Cornell, Mumbai-based director at fund manager India Advisory Partners (IAP), which targets domestically-focused Indian firms.

Securing land for big projects is fraught with problems. Mining and power companies can’t dig the coal and other raw materials they need because of a slowdown in environmental clearances, sending them in search of resources in Australia, Indonesia and elsewhere.

Even state-run Coal India Ltd., the world’s biggest coal miner, missed production targets, in part because tighter environmental rules kept it from gaining access to new domestic mines, adding urgency to its hunt for mining assets abroad. In some cases, companies have permits but can’t start mining.

Indian home and personal care goods makers Godrej Consumer Products, Dabur India Ltd. and Marico are searching for buys in Africa amid fierce competition inside India.

Even with a severe infrastructure deficit at home, Indian builders of roads and power plants are active overseas. Hyderabad-based GVK Power & Infrastructure Ltd. in January signed a memorandum of understanding to invest $3-billion to $5-billion to build airports on the Indonesian islands of Bali and Java.

For India’s infrastructure builders, “the fact that they’re looking for opportunities overseas highlights the policy paralysis that exists here,” said IAP’s Mr. Cornell.

India’s economy grew at a 7.8 per cent annual pace in January to March, its slowest in five quarters and well below forecasts. The central bank has raised interest rates 10 times since March 2010, which has taken a toll on sentiment among companies and investors.

Mumbai stocks are among the world’s worst performers this year, with the Sensex down more than 8 per cent.

Foreign portfolio investors have put a net $494-million into Indian stocks in 2011, well off the record pace of last year, which ended with $29.3-billion in net fund inflows.

Few question India’s attractiveness as a long-term bet. Local auto makers Maruti Suzuki and Hero Honda Motors and global giants like Ford and Hyundai Motor are adding capacity in an Indian car market that grew 30 per cent in the fiscal year that ended in March.

Near-term sentiment is weaker. Three-quarters of leading firms have lost faith in the government and believe a governance crisis and policy limbo will hit economic growth and their investment plans, a recent survey found.

Saurabh Mukherjea, head of equities at Ambit Capital in Mumbai, said rising domestic competition is a bigger driver of outbound investment than policy gridlock, which combined with inflation is more of a deterrent for foreign investors.

“I think our reputation as a country to put money in has taken a knock because of the state of our governance – I don’t think there is any two ways about it,” Mr. Mukherjea said.

More importantly, he said, governance issues and the policy gridlock are hitting economic growth, which is “softening quite meaningfully at the moment.”