Indian companies require global view of fund-raising

The recent pressures on the Indian rupee have shown the importance of a constant inflow of foreign exchange for the health and growth of the Indian economy. The growing fiscal deficit and negative balance of payments have had an adverse impact on the Indian currency. India is one of the world’s major growth markets and its integration with international financial markets is essential.

As we have seen in the past with developed economies, followed by South Korea and China, Indian companies too need to Think Global, whether their search is for new markets or capital to fund their business. Companies in most of the countries India competes with enjoy low interest costs and access to well developed capital markets. Until India can provide equal advantages, companies should use the resources available globally.

Fund-raising methods

Joint ventures, private equity and investment funds: India’s foreign direct investment (FDI) regime allows Indian companies to bring in capital for their projects by share transfer, stake sales and joint ventures. In most industries FDI of up to 100% is allowed in an Indian business. By partnering with companies that have financial clout and access to cheaper capital, Indian companies can increase their capital base and bring in good-quality, long-term capital.

Gautam Khurana is the managing partner at India Law Offices in New Delhi.