With emerging number of start-ups in India and their continuous requirement for expansion and growth, need of funds is increasing at an alarming rate. To cater to their needs and for simultaneous economic development our government has been making continuous effects to make India an Investor friendly market.
A company may either take these funds as capital or debt.
When a person resident outside India makes an investment directly in the capital of an Indian company, it is termed as a Foreign Direct Investment.
This investment can be made through two routes, viz. Automatic and Approval route.
Borrowing of money from residents outside India by Indian companies are in the form of External Commercial borrowings. These include Loans, Optionally Convertible Debentures, Securitized Instruments, etc.
Both FDIs and ECBs involve timely approvals, intimations and reporting to be done with Reserve Bank of India at different stages of investment or borrowing as the case may be.
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