Maksim Consultants provide a range of consulting services to our clients in Foreign Direct Investment which includes:

• Foreign Direct Investment (FDI)
• Overseas Direct Investment (ODI)
• External Commercial Borrowings (ECB)

Foreign Direct Investment (FDI)

Foreign direct investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company. Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies. Foreign direct investments are commonly made in open economies that offer a skilled workforce and above-average growth prospects for the investor, as opposed to tightly regulated economies. It may include provisions of management or technology as well.

Types of Foreign Direct Investment

HORIZONTAL INVESTMENT

A horizontal direct investment refers to the investor establishing the same type of business operation in a foreign country as it operates in its home country

VERTICAL INVESTMENT

A vertical investment is one in which different but related business activities from the investor’s main business are established or acquired in a foreign country

CONGLOMERATE INVESTMENT

A conglomerate type of foreign direct investment is one where a company or individual makes a foreign investment in a business that is unrelated to its existing business in its home country

Maksim Consultant’s Provide Following Services To Their Clients Under FDI

• Compliance with FDI regulations and getting regulatory approvals
• Compliance of the procedure including Chartered Accountants ‘Certification for repatriation of income/assets from India
• Transfer of shares from Indian resident to non-resident

Overseas Direct Investment (ODI)

Overseas Direct Investment (ODI) means investments, either under the Automatic Route or the Approval Route as per the RBI guidelines, by way of contribution to the capital or subscription to the Memorandum of a foreign entity or by way of purchase of existing shares of a foreign entity either by market purchase or private placement or through stock exchange, signifying a long-term interest in the foreign entity (JV or WOS).

Services Maksim Consultants Provide To Their Clients In This Respect

• Filing of Form ODI duly supported by the documents like the certified copy of the Board Resolution, Statutory Auditors’ Certificate and Valuation report, etc.
• Prior approvals from the RBI
• Evaluating the parameters for considering the proposals under the approval route

External Commercial Borrowings (ECB)

The External Commercial Borrowings (ECBs) is the financial instrument used to borrow money from the foreign sources of financing to invest in the commercial activities of the domestic country.

The DEA (Department of Economic Affairs), Ministry of Finance, Government of India along with Reserve Bank of India, monitors and regulates ECB guidelines and policies.

ECB can be raised in Indian Rupees (INR) and / or any convertible currency. Any entity raising INR denominated ECB is not permitted to convert the liability arising out of this ECB into foreign currency liability in any manner or assuming foreign currency risk is any manner by either entering into a derivative contract or otherwise.

Under the ECB framework, ECBs can be raised either under theAutomatic Route or under the Approval Route.

• For the automatic route, the cases are examined by the Authorized Dealer Category-I (AD Category-I) banks
• Under the approval route, the prospective borrowers are required to send their requests to the RBI through their ADs for examination. While the regulatory provisions are mostly similar, there are some differences in the form of amount of borrowing, eligibility of borrowers, permissible end-uses, etc. under the two routes
• In both these cases, Loan Register Number (LRN) (Form 83) has to be obtained and monthly filings (ECB-2) have to be done with the Reserve bank of India

Maksim Consultant’s Provide Following Services To Their Clients Under ECBs

• Certification of Form 83 to be submitted to the Authorized Dealer and RBI
• Obtaining loan request number and drawing down the same