Introduction:
There are numerous Indian companies looking for funding’s for their projects as it has been seen that the majority of the Indian companies lack funding that they need to execute their ideas and projects.
The only two sources from which funding can be done for projects are equity and debt, but these options are not much viable. With the advent of foreign direct investments in India, Indian projects have been receiving foreign investments with which they can easily fund their projects and execute them well. They become very helpful for
Attracting international funds for projects because there comes the capital that they were looking for and with foreign investments comes foreign technology and knowledge, which further accelerates the potential of the project.
International funding is a very challenging process but with the help of FDI India, companies can achieve this pretty easily. The government of India is also encouraging foreign investments in the country and is also encouraging the idea of Atma Nirbhar Bharat for which FDI is one of the biggest motivators.
Let’s look at the different international funding options for projects in India.
Equity-Based Funding:
In most sectors, international funding has been allowed; what needs to be scrutinized in that is the percentage of FDI in the sector in which the investments are being made.
International equity-based funding for any projects in India is easy to be found. This can be done by making joint ventures with international companies where partnerships are made and a part of the project can be taken from them. They will help in funding as well as the technology aspect of the project as well.
The international shareholder is also a partner in a joint venture method that will access international capital markets where the foreign investor comes from, which will further help raise more equity and get low-cost debt.
The listings of an Indian company on foreign stock exchanges and alternate investment exchanges can be done either through organic listing or even by the process of reverse merging with a listed company.
Equity based funding for projects across international borders is the most apt as it has turned out to be an economical option for raising funds.
Debt Based Funding:
It is best to raise debt-based international funding, instead of getting debt funds from international banks and financial institutions. Major countries like the US, Canada, UK, Switzerland, Japan, China, and Taiwan readily give business loans to Indian companies.
The interest rate can be higher in the case of international funding through small banks and debt funds. However, the rate will be comparatively lower for the MSME sector than for any domestic funding options.
Joint Ventures also raise foreign funding for projects because they have their banking relations. They help get low-cost debt but it is important that the foreign partner be part of the business that requires funding.
Conclusion:
Foreign funding, in particular through FDI, is now an important source of fund access to Indian projects. There are opportunities for both funding and technology-based via the equity-based methods of joint ventures and foreign listings. Debt-based funds are also available, although at a higher cost, through international banks, financial institutions, and via joint venture partners.
The positive encouragement of FDI by the Indian government aligns with the vision of Atma Nirbhar Bharat, thus proving to be a welcoming opportunity for businesses to expand and compete at a global level. It provides Indian companies the avenue of gaining access to the required resources to undertake the execution of their projects and thus contributing to the growth of the economy of the country.