Two Sisters: Winning Streak of Indian Business

India is the most preferred investment destination for last few years for its conducive environment. Many consider 1991 was a watershed year in Indian economic history. Macro economic reforms measure taken by Dr. Manmohan Singh, the-then Finance Minister of Narsimha Rao government, lift the barriers for the foreign investment in India & as thought of Indian economy took a massive turn thereafter.

India is preferred destination for investment for its political stability, natural resources, a large no. of English speaking population, well regulated financial market and tested legal system and above all investor-friendly attitude of the government. Some statistics might help in understanding the same. Cumulative amount of FDI inflows into India from 2000-2011 is

US$ 1, 94,814 million & amount of investment in 2010-11 is US$ 19,427, though it’s a decline from 2009-10 where the invested amount was US$ 25,834. (FACT SHEET ON FOREIGN DIRECT INVESTMENT From AUGUST 1991 to MARCH 2011 of DIPP)

Countries like USA, UK, Netherlands, Japan, Germany, Singapore, Mauritius, France etc. didn’t waste much time to grab the opportunity to tap the potential market in India. As there were (are) several sectoral caps in the foreign direct investment, most of the initial investment was in form of Joint Ventures. With regular changes in FDI norms, nature of investment too has changed. Still, most preferred route for investment in the potential market is Joint Venture.

To substantiate this fact, we might refer to two cases of recent past; yes, you have rightly guessed, those are:-

‘Cairn-Vedanta deal caught in regulatory hurdles’

‘RIL-BP has struck the biggest ever JV in the context of foreign investment & production sharing’

Let’s see the present legal nitty-gritty of doing business in India by examining these two cases.

Cairn-Vedanta Deal

Vedanta Resources wants to buy a 51% controlling stake in Cairn India for $8.5 billion. Vedanta Resources is in talks with Cairn Energy,...