Foreign Ventures Into the Indian Market

Abstract:

Foreign Ventures Into the Indian Market has been on the rise since past few years, especially with the boom in the IT sector. Manufacturing, banking, healthcare and textiles are among the other important sectors where foreign ventures have taken place in the Indian market.

An Overview of Foreign Ventures Into the Indian Market-

Venture capital and private equity funding are a new system of providing financial assistance to various industrial units in Indian market to carry out developmental activities.

In the later part of 1990s, IT sector came into existence in the Indian market which was a boon to the country in terms of foreign venture. The dot com industry suffered a downfall during the year 2001-2002, which made the foreign investors reconsider all the parameters before investing in any undertakings in Indian market. The venture capitalists monitored each and every attribute of the Indian market at the time when it witnessed an upsurge in the stock exchange. India is the developing country with emerging markets where the foreign investors prefer to invest with the aim to globalize their business. The global venture capitalists, high-net worth individuals and foreign investors are by and large involved in the foreign ventures in Indian market.

Major Venture Capitalists in Indian Market-

• Newbridge Capital
• Chrys Capital
• Warburg Pincus
• Temasek
• General Atlantic

Sectors in Indian Market Attracting the Maximum Foreign Investments-

• IT-ITES (USD 422.90 million)
• Manufacturing (USD 331.45 million)
• Health care and Life Sciences (USD 201.24 million)
• Banking and Financial Services (146.70 million)
• Textiles (USD 146.50 million)

Regulations for Foreign Ventures Into the Indian Market-

A Foreign Venture Capital Investor (FVCI) is one who wishes to set up a foreign affiliated firm in India to globalize the parent company located abroad. This affiliated firm is registered under Foreign Venture Capital Investor Regulations, 2000 (FVCI Regulations). The foreign investors in this regard are permitted to carry out investments in domestic Venture Capital Funds (VCFs) and Venture Capital Undertakings (VCUs). These foreign investors working under FVCI Regulations are privileged with certain benefits from the SEBI. FDI scheme is not applied to the FVCIs. The companies registered by SEBI are not entitled to any tax exemption as such, but the Venture Capital Company enjoys the exemption of tax under Section 10(23FB). The income of FVCI is exempted from tax issues even after the domestic company which has experienced the FVCI investments are enlisted in the stock exchange in India.

Last Updated on 05/07/2011