India’s investment environment is friendly enough for Chinese investors with a little local knowledge and due diligence, a legal expert familiar the market said.
Mumbai-based fintech start-up Kissht recently raised US$10 million in funding primarily from Fosun International, a Chinese investment consortium. The Krishnamurthy & Co team acted for and represented Kissht and its owner OnEMI Technology Solutions, led by Mumbai-based partner Sanket Sethia and associate Vwastav Ghosh.
“The only challenge we face in dealing with foreign investors wanting to invest in India for the first time is predominantly acquainting them and getting their expectations aligned with the sentiments prevalent in the Indian PE/VC market,” Sethia told China Business Law Journal.
“What may be a norm and a standard practice elsewhere in the world may not be in the best interest of the Indian companies,” said Sethia. “Sensitizing foreign investor clients to the various nuances of investing in Indian companies, as against investing in companies in other parts of the world, is an absolute must for all Indian lawyers. Primarily, this makes sure that time and effort is spent on the more crucial parts of the deal.”
Foreign direct investment into India is regulated through two routes, one which is automatic and one that requires approvals. “Foreign investment in Indian fintech companies falls 100% under the automatic route,” said Ghosh. “Hitherto, India has not had country-specific investment laws for foreign investors investing in Indian fintech companies.”
From a foreign exchange management standpoint, there are hardly any impediments that may be a counter-incentive for foreign investors willing to invest in Indian fintech companies, said Sethia. “It is always advisable for any foreign investor to ensure that the prospective investee company is on the right side of the law, as far as compliance to the various sector-specific regulations are concerned.
“For example, for a non-banking financial institution providing a peer-to-peer platform, Peer to Peer Lending Platform (Reserve Bank) Directions 2017 will apply.”