Presented byNeha Singhi

Plot D2/1, Block EP, Sector V,Salt Lake City, Kolkata- 700 091

Tel: 9133 4008 3385Email: neha@nehasinghi.com

1. Foreign Investments in India2. Trend of Foreign Investment3. Factors attracting Foreign Investment4. Structure of Foreign Investment5. Foreign Direct Investment

◦ FDI in India◦ No Entry◦ Mode of FDI◦ Foreign Investment Inflows◦ Investment by NRI

6. External Commercial Borrowings◦ Know ECB better◦ Amount and Maturity◦ Benefits

7. ConclusionXX

India has always stood the test of times, and inspite of the low market sentiments world-over in 2008, Indian economy has managed to pull through the crisis.

India has dynamic and highly competitive private sector which has long been the backbone of its economic activity and offers considerable scope for foreign investment, joint ventures and collaborations

The liberalised economy has also paved way for portfolio investment , ECB/FCCB borrowings providing funding avenues to various companies.

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Liberalisation of economy Huge consumer base Drive for Fast Growth Technological and Innovation Expansion in Market Share Incentive by Government Overcome Competition Domestic Demand Constraints Means of CommunicationXX

FDI may come in India through Automatic or Approval route.

Foreign Institutional Investors registered with SEBI and NRIs are eligible to purchase shares and convertible debentures issued by Indian companies under the Portfolio Investment Scheme.

Eligibility for Investment:◦ Any person or entity incorporated outside India can

invest in India subject to the FDI policy and required approvals

◦ No citizen of Pakistan or entity of Pakistan can invest in India

◦ Bangladeshi can invest after prior approval from FIPBXX

No entry for foreign investment in any form in an organisation engaged in any of the following activities:◦ Business of chit fund, or◦ Nidhi Company, or◦ Agricultural* or plantation activities, or◦ Real estate business, or construction of farm

houses*◦ Trading in Transferable Development Rights (TDRs).◦ Retail Trading (except single brand product retailing)◦ Atomic Energy◦ Lottery Business◦ Gambling and Betting

• Exceptions

Shares or debentures of existing Indian companies directly on non-repatriation basis

Under the Portfolio Investment Scheme of NSE/BSE listed Indian companies on repatriation and non-repatriation basis◦ Maximum of 5% of the paid-up share capital by NRI◦ Aggregate investment by all NRIs cannot exceed 10%, or 24% if a

special resolution is passed NRIs can also obtain loans abroad against a collateral of

shares or debentures of Indian companies NRI or PIO can open a demat account with any depository

participant (DP). No permission is required from the RBI to open a demat account

NRIs can invest in exchange-traded derivative contracts out of funds held in India only on a non-repatriation basis

NRIs are not permitted to make investments in Small Savings Schemes including PPF.

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Basically commercial loans availed from non-resident lenders with minimum average maturity of 3 years.

FCCBs are bond type structure where the interest and principal is paid in foreign currency

ECB may be through Automatic route, requiring no approval OR through approval of RBI.

There is criteria of eligible buyers and recognised lenders for ECB

There are end-use restrictions in ECBXX

Automatic Route:◦ The maximum amount of ECB which can be raised by

a corporate is USD 500 million or equivalent during a financial year.

◦ ECB up to USD 20 million or equivalent in a financial year with minimum average maturity of three years .

◦ ECB above USD 20 million and up to USD 500 million or equivalent with a minimum average maturity of five years.

◦ ECB up to USD 20 million can have call/put option provided the minimum average maturity of three years is complied with before exercising call/put option.

Approval Route◦ Additional USD 250 million with average maturity of

more than 10 yearsXX

Investor◦ ECB is for specific period, which can be as short as

three years◦ Fixed Return, usually the rates of interest are fixed◦ The interest and the borrowed amount are repatriable◦ No owners risk as in case of Equity Investment

Borrower◦ No dilution in ownership◦ Considerably large funds can be raised as per

requirements of borrower◦ Usually only a fixed rate of interest is to be paid◦ Easy Availability of funds because ECB is more appealing

to Investors XX

Investors have posed faith in Indian economy, and surely the golden bird will continue to soar

high!

** For any clarifications, please contact the author