Description
PRESENTATION ON FOREIGN INVESTMENT IN INDIA
Trend of Foreign Investment
Factors attracting Foreign Investment
Structure of Foreign Investment
Foreign Direct Investment
Presented by Neha Singhi Plot D2/1, Block EP, Sector V, Salt Lake City, Kolkata- 700 091 Tel: 9133 4008 3385 Email: [email protected]
1. 2. 3. 4. 5.
? ? ? ? ?
6.
Foreign Investments in India Trend of Foreign Investment Factors attracting Foreign Investment Structure of Foreign Investment Foreign Direct Investment
FDI in India No Entry Mode of FDI Foreign Investment Inflows Investment by NRI Know ECB better Amount and Maturity Benefits
? ? ?
7.
External Commercial Borrowings Conclusion
X X
?
?
?
X X
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.
60,000 Direct Investment 50,000 Portfolio Investment Total Investment Inflows 40,000
Amount in US$ million
30,000
20,000
10,000
0
Source: Data is derived from RBI website
? ? ? ? ? ? ? ?
?
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 Communication
X X
Investment is made towards core capital of an organization viz. investment in equity shares, convertible preference share and convertible debentures or like
Refer to commercial loans in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments or FCCBs.
? ?
?
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 FIPB X X
?
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
•
Foreign Direct Investment
Direct Investment
Portfolio Investment
Equity or like
Reinvested Earnings
GDR/ADR
FII
Offshore funds and others
Approval Route
Automatic Route
RBI
Government (SIA/FIPB)
? ?
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
? ?
? ?
X X
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.
?
? ? ? ?
X X
Basically commercial loans availed from nonresident 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 ECB
?
Automatic Route:
?
Approval 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.
? Additional USD 250 million with average maturity of more than 10 years X X
?
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 X X
Investors have posed faith in Indian economy, and surely the golden bird will continue to soar high!
** For any clarifications, please contact the author
doc_599416930.ppt
PRESENTATION ON FOREIGN INVESTMENT IN INDIA
Trend of Foreign Investment
Factors attracting Foreign Investment
Structure of Foreign Investment
Foreign Direct Investment
Presented by Neha Singhi Plot D2/1, Block EP, Sector V, Salt Lake City, Kolkata- 700 091 Tel: 9133 4008 3385 Email: [email protected]
1. 2. 3. 4. 5.
? ? ? ? ?
6.
Foreign Investments in India Trend of Foreign Investment Factors attracting Foreign Investment Structure of Foreign Investment Foreign Direct Investment
FDI in India No Entry Mode of FDI Foreign Investment Inflows Investment by NRI Know ECB better Amount and Maturity Benefits
? ? ?
7.
External Commercial Borrowings Conclusion
X X
?
?
?
X X
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.
60,000 Direct Investment 50,000 Portfolio Investment Total Investment Inflows 40,000
Amount in US$ million
30,000
20,000
10,000
0
Source: Data is derived from RBI website
? ? ? ? ? ? ? ?
?
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 Communication
X X
Investment is made towards core capital of an organization viz. investment in equity shares, convertible preference share and convertible debentures or like
Refer to commercial loans in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments or FCCBs.
? ?
?
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 FIPB X X
?
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
•
Foreign Direct Investment
Direct Investment
Portfolio Investment
Equity or like
Reinvested Earnings
GDR/ADR
FII
Offshore funds and others
Approval Route
Automatic Route
RBI
Government (SIA/FIPB)
? ?
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
? ?
? ?
X X
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.
?
? ? ? ?
X X
Basically commercial loans availed from nonresident 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 ECB
?
Automatic Route:
?
Approval 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.
? Additional USD 250 million with average maturity of more than 10 years X X
?
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 X X
Investors have posed faith in Indian economy, and surely the golden bird will continue to soar high!
** For any clarifications, please contact the author
doc_599416930.ppt