There are many Indian companies that look out for funding’s for their projects as it has been seen that the majority of the Indian companies lack the funding that they require to execute their ideas and projects.
Equity and debt are the only two sources through which the funding can be done for projects but these options are not much viable. With the advent of foreign direct investments in India, the Indian projects have been receiving foreign investments with which they can easily fund their projects and execute them well.
Getting international funding for projects becomes very beneficial for the company as they receive the capital that they were looking for and also with the foreign investments comes the foreign technology and knowledge that further accelerates the potential of the project.
Procuring international funding can be a very daunting task but with the expertise of FDI India, this can be easily achieved by companies. Even the government of India is promoting foreign investments in the country and also promoting the idea of Atma Nirbhar Bharat for which FDI is one of the biggest motivators.
Let us have a look at the options for international funding for projects in India.
- The government of India has given the allowance of international funding in the majority of the sectors and one thing that must be checked is the percentage of the FDI which is allowed in the sector where the investments are being made.
- Finding equity-based international funding for projects in India can be done easily. For getting international funding for projects, partnerships can be formed with international companies in joint ventures. They will help in the funding as well as in the technology aspect of the project as well.
- By the method of acquiring an international shareholder and a partner in a joint venture will give access to the international capital markets where the foreign investor belongs, that will help in raising additional equity and getting low-cost debt.
- Listing of an Indian company on the international stock markets and alternate investment exchanges can be done through the organic listing or through the process of a reverse merger with a company that is already listed.
- Equity-based international funding for projects can be most suitable as it is a more economical option of fundraising
Debt Based Funding
- To raise debt-based international funding it is best from getting debt funds from international banks and financial institutions. The major countries such as the US, Canada, UK, Switzerland, Japan, China and Taiwan readily give business loans to the Indian companies.
- International funding through small banks and debt funds is ideal for the MSME sector. The rate of interest, in this case, can be higher but will be comparatively lower than the domestic funding options.
Through the Joint Ventures also international funding can be raised for projects as they have their banking relations. They help in getting a low-cost debt but it is essential for the foreign partner to be a part of the business that requires the funding.