There is a certain set of guidelines that have to be followed to get foreign funding in India. The government of India has laid down certain police regarding foreign direct investments in India and the foreign investors have to abide by the rules to make investments.
The investors and the businessmen who are interested in FDI in India must know about the requirements for getting foreign funds in India.
Many businesses are interested in getting foreign funds for their business investments or expansion as getting investments from the domestic market or through banks get imposed with a high-interest rate.
International funding provides various benefits to the investing company and also to the investor. Due to foreign direct investments, many companies have successfully expanded their business and it is also beneficial for the growth of the company.
Why choose Foreign Funding for Business?
- Due to the various reforms are done by the government to ease the business environment of the country. FDI has now become a very important part of the business environment of Indian Companies.
- Even in the start-up environment of India, the role for the foreign investors can be been massive as out of the 30 unicorn companies of India 18 such companies have major foreign investments in them.
- Also, companies are moving towards foreign funding because the company through it receives capital, technological advancements, and new knowledge.
- An important reason to choose foreign funding for a business is that foreign funding is also beneficial for the country and new jobs can be created through it.
What are the Requirements for getting FDI in India?
- The requirements for getting foreign direct investments in India depend on the sector in which the funds are being taken.
- If the sector falls under the government route of FDI then prior government permissions have to be taken to get the investments.
- If the sector falls under the automatic route of FDI then there is no requirement of taking permission and the foreign investor can make the investments.
What are the Routes of getting foreign funds in India?
- Two routes have been made by the government of India for foreign investments to be made in the various sectors. First is the automatic route and second is the government route.
- Sectors are divided into the government and the automatic route. The government has also made clear the percentage of foreign investments that are allowed in the various sectors. Only according to the percentage that is given an allowance for FDI can be invested by the foreign investors.
- The automatic route is in which there is no need for foreign investors to take permission from the government to make investments in India.
- The government route is in which there is a requirement for taking the government’s approval before making investments in any Indian company by the foreign investors.
- Few of the sectors that come under the automatic route are Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services under the civil aviation sector), Airports (Greenfield + Brownfield), Asset Reconstruction Companies, Auto-components, Automobiles, Biotechnology (Greenfield), Broadcast Content Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services, Capital Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal & Lignite, Construction Development, Construction of Hospitals, Credit Information Companies, Duty-Free Shops, etc.
- Few of the sectors that come under the government route are Banking & Public sector, Mining & Minerals separations of titanium bearing minerals and ores- 100%, Core Investment Company: 100%, Broadcasting Content Services: 49%, Food Products Retail Trading: 100%, Satellite (Establishment and operations): 100%, Multi-Brand Retail Trading: 51%, Print Media including publications, the printing of scientific and technical magazines, specialty journals, periodicals, and a facsimile edition of foreign newspapers- 100%, etc.