Delaware Flip Model: Issues and Concerns of Corporate Governance and Foreign Investment
India’s NPA crisis is deepening and banks are unable to lend to Indian businesses - large or small – as liberally as they used to in the past for new technologies, building start-ups, strategic expansion or R&D. This credit crunch has led to an economic slowdown and increase in unemployment among persons with college degrees. There is, therefore, an urgent need for the Government of India to come up with laws, regulations and policies to promote the market for private capital in India, such that Indian businesses may access alternate sources of capital for growth and innovation, i.e., through sources other than banks which have been the traditional source of financial capital in the India. Over the past few decades, venture capital in India has evolved from its nascent to its sophistication level. There are many hurdles for India’s venture capital industry, foreign investment, since there is the absence of well-established or well-structured capital market. Regulatory obstacles are another major issue for venture capital investors in India. My paper deals with the issues of corporate governance and foreign investment in India. What are the laws for regulating foreign investment coming into India for both strategic and financial purposes? What are the Changes required in the Existing Taxation and Corporate Governance provisions? Most importantly, what the government should do to promote foreign investment in India?