India has a highly advanced and widespread network of financial institutions to meet the short-term and long-term requirements of funds. A dynamic and vibrant equity culture has evolved. A chain of Stock Exchanges, Mutual Funds, Merchant Bankers. Bankers and Brokers provide the institutional mechanism to tap into the enormous Indian money market.
Major international banking groups like Citibank, Bank of America, Grindlays Bank, Standard Chartered, Bank of Tokyo, Banque Nationale De Paris, Swiss Bank, Deutche Bank etc... have rapidly expanding operations in India. A large range of domestic banks also offer a wide portfolio of products and services to the corporate sector. Part of the equity capital and the total loan capital requirements of a project are subscribed to by State-level institutions like Kerala State Industrial Development Corporation (KSIDC) and National financing institutions like IDBI, IFCI and ICICI.
Projects are financed by a combination of long-term loans and equity with a debt : equity ratio averaging 1.5 : 1. The loan will be repayable in a period of 8 to 10 years depending on the debt servicing capacity with an initial moratorium of 2 years. Minimum promoters' contribution required for a project is 25 % of the project cost. Part of the promoters' contributions can be obtained from State-level institutions like KSIDC.
Maximum term loan eligibility is limited to 75% of the costs of fixed assets. Promoters also can raise equity from the primary market. For a public issue a minimum of 25% of the issued share capital should be offered to the public. Promoters should hold a minimum 25% of the issued share capital.
For 100% Export Oriented Projects (EOU)
Duty-free import of capital goods, components/spares, offices equipment, raw materials, consumables etc...
Supplies made to a 100% EOU from Domestic Tariff Area (DTA) are treated as deemed and exempted from taxes and duties.
Sales are allowed to DTA subject to sectorial caps.
Liberal conditions for foreign equity participation.
Exemption for corporate income tax upto the year 2010.
Extremely streamlined procedures for all clearances.
Even more liberalised packages for export-oriented Electronics Hardware Technology Parks.
INCOME TAX HOLIDAY - a unique facility to industrial units in Idukki & Wayanad districts : Industrial Units that will be set up in Idukki & Wayanad districts in Kerala on or before 31st March 1999 will be eligible for 5 year income tax holiday. Further, units will also benefit from income tax exemption for 30% of the profits for another 5 years that follow the tax holiday. The scheme has retrospective effect from 1st of October 1994. For further details contact Business Development Group, KSIDC, Trivandrum.
OTHER EXPORT PROMOTION SCHEMES - Under zero duty scheme, capital goods can be imported without duty against the commitments of exports of 6 times CIF value of imported capital goods to be met over 8 years. Under Export Promotion Capital Goods Scheme, Capital goods can be imported at a concessional rate of customs duty of 15% CIF value against the export commitment of 4 times CIF value over 5 years.
For NRIs And Overseas Corporate Bodies (OCBs)
HOW TO REPATRIATE YOUR PROFITS The process of repatriation of capital invested and income earned on it is simple. Companies with direct foreign investment, established on the basis of repatriation, are allowed to repatriate dividends, net of taxes. The equity invested can also be repatriated, should the investor decide to do so.