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Foreign Sources of Finance

Presented by -
Havin
Sachit
Akash
Irfan
Aditya
Kashinath
Shilpa
Deepak


Types of Foreign Investments
Foreign Institutional Investors
Foreign Direct Investors
American Depository Receipts
Global Depository Receipts
FCCB
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Introduction
India is one of the fastest growing
economies of the world and the entire world
is watching our growth and development
process. Despite the fact that India is
growing at a very fast pace, China is still
growing faster than India. Let us see some
Statistics from the Industry Chamber
ASSOCHAM.
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India most attractive for Foreign
Investors
Private external inflows to India has been
the highest in the last three to four years,
compared to other emerging countries. The
booming capital markets have greatly
enhanced foreign investors interest in
FCCBs, ADRs, and GDRs issued by Indian
Companies. India with inflows of $19.3
billion in 2005 was third after China and
South Korea.
Forms of Finance
Purchase of assets: why? why not?
Quick entry, local market know-how, local
financing may be possible, eliminate
competitor, buying problems
New investment: why? why not?
No local entity is available for sale, local
financial incentives, no inherited problems,
long lead time to generation of sales
International joint-venture
Shared ownership with local and/or other non-
local partner
Shared risk

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Alternative Modes of Market
Entry
FDI - 100% ownership
FDI < 100% ownership,
International Joint Venture
Strategic Alliances (non-equity)
Franchising
Licensing
Exports: Direct vs Indirect

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India most attractive for Foreign
Investors
The average inflows for India through
bonds, equities and loans during 2007-10
has risen by 158.4 percent as against 40.3
percent for other emerging markets. This is
largely driven by Indian companies raising
funds in global markets. This flow has
increased after Indian banks have permitted
to raise funds through issuance of
innovative debt capital in foreign currency.
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Dollar Flows
Private external flows to Asian countries through new bonds,
equities and loans. (in $ million)
2001 2004 2007 2009 2010 Growth %
Asia 67483 67201 87968 123719 150388 14.3
China 5567 8892 13590 24368 35797 32.6
S Korea 17021 14694 17237 24424 34463 21.2
India 2382 1381 18149 13918 19316 88.1
Hong
Kong
18307 12602 4094 13555 15307 -1.9
Taiwan 3794 10959 9056 15309 11701 34.4
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Dollar Flows Growth Rate
-10
0
10
20
30
40
50
60
70
80
90
China Hong
Kong
India S Korea Taiwan
Growth %
Average annual source:EIU (in $ m)
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FDI inflows to India double in
Apr-Sept 2009 to $ 4.4 billion
The India story keeps getting bigger.
Foreign Direct Investment (FDI) inflows
during the first half of the financial year
have doubled to $4.38 billion in 2009 as
against $2.2 billion during April-September
2008 as per Government of India report
released on November 20, 2009.
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FDI Inflow
0
1
2
3
4
5
6
2003-04 2004-05 2005-06
India
In $ b
2.19
3.21
5.52
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Country wise FDI Inflow to India
Singapore has moved up from the seventh
position to the second position in terms of
major sources of FDI to India and has in the
process taken over US and UK. Mauritius
with $2.54 billion FDI inflows during April
September 2009 remained at the top of the
list followed by Singapore $481.7 million.
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Top Sources of FDI Inflow to
India in $ million
Country 2005 2006 Growth %
Mauritius 891 2545 185
Singapore 118 481 305
U S 323 406 26
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Top Sources of FDI Inflow to
India in $ million
0
500
1000
1500
2000
2500
3000
Mauritius Singapore US
2005
2006
Growth %
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Sector wise FDI Inflow to India
Since 1991, when foreign investment norms were
simplified, it is electrical equipment which
includes computer hardware and services that
has been the top drawer followed by services,
telecom, transport and energy. Although, in April-
September 2006 Services ($1.51 billion) attracted
more FDI than electrical equipment ($777.9
million), while telecom remained at third position
with $405.2 million. Transport ($258.7 million)
and energy ($138.3 million) occupied the fourth
and fifth places.
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Preferred Destinations in India
Since 1991, north India has accounted for
nearly a quarter of the inflows, followed by
Maharastra, Dadar & Nagar Haveli and
Daman & Diu, which cornered around 22
percent of the FDI flows. While the
southern part of India saw a steep growth in
inflows, Delhi and Mumbai occupied the
top two slots.
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India v/s India
Hence we can say that there are two Indias in this
country looking to progress made by some regions
and states despite all odds still not removed in
terms delays and red tape.
One India is straining at the leash, eager to spring
forth and live up to all the adjectives that the
world has been showering recently upon India.
The other India is the leash.
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India v/s India
And one India a tiny little voice at the
back of the head is looking down at the
bottom of the ravine and hesitating.
The other India is looking up at the sky and
saying, its time to fly.

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Thank You