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Indian companies going for abroad investments have largely used either their locally incorporated overseas subsidiaries or have set up holding companies and/or special purpose vehicles (SPVs) in offshore financial centres or other regional financial centres.
In 2005, Indian companies were allowed to float SPVs in international capital markets to finance acquisitions abroad, facilitating the use of leveraged buyouts. Since then, SPVs set up in off-shore financial centres, such as, Mauritius, Singapore and the Netherlands, have been mainly used as conduits to mobilise funds and invest in third countries, keeping in view the business and legal consideration, taxation advantages and easier access to financial resources in those countries. (Click on graphics)
