SOURCES OF FOREIGN CAPITAL

SUBMITTED BY:-
AAYUSH
 SOURCES OF FOREIGN CAPITAL

INTRODUCTION
Most countries of the world which raced to the path of economic and industrial development
had to depend on foreign capital to some extent. Under developed countries like India have to
depend on foreign capital for financing their development programmes as they suffer from
low level of income and low level of capital accumulation. The degree of dependence,
however, varies from country to country depending upon its level of mobilization of domestic
capital, technology development, attitude of the government, etc. But the fact cannot be
denied that foreign capital contributes in many ways to the process of rapid economic growth
and industrialization.

NEED FOR FOREIGN CAPITAL

The need for foreign capital in a developing country like India arises on account of the
following:
1. Inadequacy of Domestic Capital: In view of the inadequacy of domestic capital, foreign
capital is needed to meet the huge requirements of development projects in the path of rapid
economic development and industrialisation.
2. The Technology Gap: As compared to the advanced countries there is a lot of technology
gap which necessitates import of foreign technology. Such technology usually comes along
with foreign capital in the form of private foreign investment or foreign collaborations. Thus,
there is utmost need of foreign capital.
3. The Initial Risk: Due to lack of experience, expertise and heavy initial risk, there is
always a lack of flow of domestic capital into lines of production. The foreign capital taking
initial risk stimulates the flow of domestic capital and stock entrepreneurship.
4. Development of Basic Infrastructure: There is also a lack of basic infrastructure which is
very essential for the economic development of the underdeveloped countries. Foreign capital
helps in the development of infrastructural facilities such as transport, communication, power
etc.
5. Balance of Payment Support: During the process of economic development, the
underdeveloped countries usually face a crisis of balance of payments due to heavy imports
of capital goods, technical know-how, spare parts and even industrial raw materials. Thus,
foreign capital is needed to face the crisis during this period.
683
OFFICIAL FOREIGN SOURCE OF FINANCE
1. Foreign Collaboration: In India joint participation of foreign and domestic capital has
been quite common in recent years. Foreign collaboration could be either in the form of joint
participation between private firms, or between foreign firms and Indian Government, or
between foreign governments and Indian Government.
2. Bilateral Government Funding Arrangement: Generally, advanced countries provide
aid in the form of loans and advances, grants, subsidies to governments of under-developed
and developing countries. The aid is provided usually for financing government and public
sector projects. Funds are provided at concessional terms in respect of cost (interest),
maturity, and repayment schedule.
3. NRI Deposits and Investments: Non-resident Indian have always been making a
contribution in Indian economy. Government has been making efforts to encourage their
deposits and investments. Various schemes have been devised which ensure higher returns;
procedures have been simplified to attract investments in primary and secondary market. Tax
incentives are given on interest earned and dividends received by NRIs.
4. Loans from International Financial Institutions: International Bank for Reconstruction
and Development (IBRD), International Monetary Fund (IMF), Asian Development Bank
(ADB), and World Bank have been the major source of external finance to India.
5. External Commercial Borrowing (CEB): Our country has also been obtaining foreign
capital in the form of external commercial borrowings from agencies like US EXIM Bank,
Japanese EXIM Bank, ECGC of UK, etc.

NON OFFICIAL FOREIGN SOURCE OF FINANCE

Foreign Direct Investment (FDI)
Foreign direct investment is one of the most important sources of foreign investment in
developing countries like India. It is seen as a means to supplement domestic investment for
achieving a higher level of growth and development. FDI is permitted under the forms of
investments.
1. Through financial collaborations / capital / equity participation;
2. Through Joint ventures and technical collaborations;
3. Through capital markets (Euro Issues);
4. Through private placements or preferential allotment.
Capital participation / financial collaboration refers to the foreign partner’s stake in the
capital of the receiving country’s companies while technical collaboration refers to such
facilities provided by foreign partner as licensing, trademarks and patents (against which he
gets lump sum fee or royalty payments for specified period); technical services etc.
From investors’ point of view, the FDI inflows can be classified into the following groups.
(a) Market seeking: The investors are attracted by the size of the local market, which
depends on the income of the country and its growth rate.
(b) Lower cost: Investors are more cost-conscious. They are influenced by infrastructure
facilities and labour costs.
(c) Location and other factors: Technological status of a country, brand name, goodwill
enjoyed by the local firms, favourable location, openness of the economy, policies of the
government and intellectual property protection granted by the government are some of the
factors that attract investors to undertake investments.
Factors that attracts FDIs in India
The following factors can be held responsible for the flow of foreign direct investments in
India:
1. India has a well developed network of banking and financial institutions and an organized
capital market open to foreign institutional investors that attracts them to undertake
investments.
2. India has vast potential of young entrepreneurs in the private sector. India skills and
competence is used as a base for carrying out production activities and export to neighbour
countries.
3. For the last few years there has been political stability in the country.
4. India enjoys good reputation among other countries as to honouring of its commitments
about repayment obligations, remittance of dividends etc.
5. India has vast potential of unskilled labour available at cheap rates as compared to other
countries, and vast natural resources that attract foreign investors.
685
Factors that Discourage FDIs
Factors that discourage foreign investors to undertake investments in India include:
(i) High rates of taxation;
(ii) Lack of infrastructure facilities;
(iii) Favouritism in the selection of investment;
(iv) Complicated legal framework of rules, regulations procedures for foreign direct
investments into India;
(v) Lack of transparency.

Investments by Foreign Institutional Investors (FIIs)

SEBI (Foreign Institutional Investors) Regulations, 1995, define Foreign Institutional
Investors as an institution established or incorporated outside India which proposes to make
investment in India in securities. The regulations make it mandatory for FIIs to seek
registration with SEBI before operating in Indian securities market. Before granting
certificate of registration, the applicant’s track record, professional competence, financial
soundness experience, general reputation of fairness and integration is taken into
consideration by SEBI.

Eligibility Criteria
An FII eligible to apply has to be:
1. An institution established or incorporated outside India as a pension fund or mutual fund or
investment trust;
2. An asset management company or nominee company or bank or institutional portfolio
manager, established or incorporated outside India and proposing to make investments in
India on behalf of a broad based fund.
3. A trustee or power of attorney holder established or incorporated outside India and
proposing to make investments in India on behalf of broad based funds. By an amendment in
October, 1996, university funds, endowments foundations or charitable trusts or charitable
societies were included.
Proprietary funds which are regulated in their home countries were also included under the
eligible list of FIIs later in February, 1997. A certificate for registration once issued is valid
for 5 years and can be renewed thereafter. FIIs are required to obtain permission under the
provisions of the FERA, 1973 in order to make investment in India.
Investment Restrictions
FIIs are permitted to invest only in the following securities.
1. Securities in the primary and secondary markets including share, debentures and warrants
of companies whether listed or to be listed on a recognized stock exchange in India including
OTC exchange of India.
2. Units of schemes floated by domestic mutual funds including UTI;
3. Dated government securities w.e.f. February, 1997;
4. Derivatives trade on a recognized stock exchange;
5. Commercial paper.
FIIs are now permitted to invest in unlisted companies. Transactions in government
securities, commercial paper including treasury bills shall be carried as per Reserve Bank of
India rules. All investments by FIIs are subject to government of India guidelines. The
general obligations and responsibilities of FIIs include appointment of a domestic custodian,
appointment of a designated bank, maintenance of proper books of accounts, record,
appointment of a compliance officer and submission of information, records or documents as
may be required by SEBI.
In case, FII fails to comply with any condition subject to which certificate has been granted
or contravenes any of the provisions of the Act then it shall be liable to the penalty of
suspension or cancellation of certificate as per SEBI (Procedure for Holding Enquiry Officer
and Imposing Penalty) Regulations, 2002. Government of India guidelines place no
restriction on the volume of investment minimum or maximum for the purpose of entry of
FIIs in the primary and secondary market and prescribes no lock in period of such
investments. Portfolio investments in primary or secondary markets initially were subject to a
ceiling of 24% of issued share capital for all the total holdings of all registered FIIs, in any
one company. The limit was enhanced to 30% w.e.f. April 1997. In 2001- 02 the government
raised this limit to 49% w.e.f September, 2001; the level of FDI in various sectors has been
raised to 74% or even beyond this in various sectors. The holdings of a single FII in any
company is subject to a ceiling of 10% of total issued capital.

NRI Investments In India

Developing countries require more and more investments to accelerate the rate of growth.
India has embarked on a plan to industrialise the country to accelerate antipoverty
programmes. The liberalization process started since 1991 is to attract more investments from
outside the country. Non-Resident Indians have always been making a contribution in Indian
economy. The present policy of Indian Government is to amend laws which placed obstacles
in attracting foreign investments and simplifying rules and regulations for setting up new
undertakings.
Meaning of NRI
Before discussing the gamut of NRI investments, it will be necessary to know who is a Non-
resident Indian. The term Non-resident is very broad and includes:
(i) Non-resident persons of Indian Nationality and
(ii) Non-resident foreign citizens.
Non-resident foreign citizens may further be of two types:
(a) Non-resident foreign citizens of Indian origin and
(b) Non-resident foreign citizens of non-Indian origin. 687
Non-resident Indians have different meaning under Foreign Exchange Regulation Act
(FERA), 1973 and Income Tax Act, 1961. It is the nationality and purpose of stay of an
individual outside India which is relevant for determining the residential status for FERA
whereas period of stay outside India determines the status of a person under Income Tax Act.
Non-resident persons of Indian origin are given special treatment in respect of investment in
India. They are almost treated at par with non-resident Indian nationals and are collectively
referred to as
Non-resident Indians (NRI).
Non-resident Indians are covered under the following categories:
1. Indian citizens who stay abroad for employment, business or vocation or for other purposes
stating their intention to stay abroad for indefinite period;
2. Indian citizens working abroad on assignments with Foreign Government / Government
Agencies or International Agencies etc.;
3. Officials of the Central and state Government and public sector undertakings deputed
abroad on temporary assignments or posted to their offices abroad.

Modes of NRI Investments

The role of NRI’s in Indian economy has been well recognized by the government which has
constantly made efforts to encourage their deposits and investments. Government has been
devising schemes which give higher returns, providing liberalizations in existing schemes
simplifying procedures and removing bureaucratic bottlenecks. The changes in New
Industrial Policy, 1991 are designed to attract significant capital flows into India on a
sustained basis. They are also aimed to encourage technology collaborations between Indian
and foreign companies.
NRI investments are both direct and indirect. Direct investments are in shares, debentures,
other securities, etc. and indirect investments are in the form of mopping up their surplus
funds into savings accounts, mutual funds etc. Some of the investment schemes for NRI’s are
discussed here:
1. Investments in Govt. Securities, UTI Units etc: NRI’s can freely purchase central and
state governments securities and units of UTI by either transferring money from foreign
countries through normal banking channels or by withdrawing money from their accounts in
India. The banks are also allowed to credit interest, dividend, sale and maturity proceeds to
the non-resident accounts or through stock exchanges in India provided it is done through
authorized dealers.
2. Investment in SBI Bonds and India Development Bonds: State Bank of India issued
“NRI Bonds” in 1998 and India Development bonds in 1991 for NRI’s. These were close
ended schemes and investments are not allowed now in these schemes.
3. Investments in Proprietorship / Partnership Concerns: The Central Government has
allowed NRI’s to invest by way of capital contribution in any proprietary or partnership
concern engaged in any industrial, commercial or trading activity on repatriations basis. The
profits accruing to the NRI may be credited to ordinary Non-resident Rupee Account or may
be ploughed back in the business itself.
The funds must come through normal banking channels. The business where investment has
to be made should not deal in land and immovable property. There is no need to obtain prior
approval of Reserve Bank but it can be informed of the details later on.
4. Investment in New Issues of Shares / Debentures: In 1992, NRI’s have been allowed to
take up or subscribe on non-repatriation basis the shares or convertible debentures issued,
whether by public issue or private placement, by a company incorporated in India. They can
also be given rights / bonus shares and these certificates can be sent out of India. Any income
accruing from such investments or sale price of these securities will be credited to their NRI
accounts.
Investments in new issues under the Forty (40) per cent scheme are now allowed on
repatriation basis also. NRI’s can subscribe to new issues of shares or convertible debentures
of any new or existing company with the right of repatriation of the capital invested and
income earned thereon, provided the aggregate issue, to non-residents qualify for the facility
of repatriation does not exceed 40 per cent of the face value of the new issue. Such
investment can be made only in private or public limited companies raising capital for setting
up new industrial manufacturing projects or for expansion or diversification etc. Such
investments can also be made in companies engaged in hospitals, hotels, shipping and
development of computer software and oil exploration services.
5. Deposits with Companies: Companies can accept deposits from NRI’s within the limits
prescribed by Reserve Bank of India. The company accepting such deposits will apply for
permission to RBI with details of deposits and NRI’s will not be required to get separate
permission.
6. Investments in Commercial Paper & Mutual Funds: NRI’s can invest in Commercial
paper issued by Indian Companies in non-repatriation basis. CP issued to NRI’s will not be
transferable.
They are also allowed to invest in mutual funds floated by private / public sector banks /
financial institutions. Such investments can also be made through secondary market. The
funds accepting such investments will get an approval from Reserve Bank of India.
7. Investment in Priority Industries: NRI’s are permitted to invest with full repatriation
benefits up to 100 percent in the issue of equity shares or convertible debentures of a private
public limited Company engaged in or proposing to engage in high priority industries. The
investments by NRI’s should cover foreign exchange requirements for import of capital
goods.
Any income out of these investments can be freely remitted except in case of consumer goods
industries where the outflow on account of dividend is balanced by export earnings of the
company. The proposed project should not be located within 25 K.M. from the periphery of
the city have a population of more than 10 lakhs as per 1991 census. It means that
government wants to utilize NRI funds for industrializing new areas or under-developed
areas.
8. Investment in Other Industries: NRI’s can invest in sick industrial units. Such units must
be incurring losses for consecutive three years, its shares are selling at a discount for 2 years
and financial institutions have formulated rehabilitation plans for such sick units. Such
investments are allowed on the following conditions: 689
(i) Investments can be made either by purchasing equity shares of existing share holders or by
subscribing to new issues of such Companies;
(ii) Bulk investment on private placement basis even up to 100 per cent of equity
Capital of sick unit.
(iii) The funds should come either as fresh foreign remittance or from NRI accounts;
(iv) The capital brought in will not be repatriated before 5 years.
(v) The sick unit will not be allowed to deal in real estate business or agricultural plantation
activities.
9. Investment in Housing & Real Estate Development NRI’s are permitted to invest up to
100 per cent in the new issue of equity shares / convertible debentures of Indian Companies
engaged in the following areas:
(i) Development of serviced plots and construction of built up residential premises;
(ii) Real estate covering construction of residential and commercial premises including
Business centres and offices;
(iii) Development of township;
(iv) City and region level urban infrastructure including roads bridges;
(v) Manufacturing of building materials;
(vi) Financing of housing development.
A permission from Reserve Bank of India is essential for making investments in above
mentioned schemes. Repatriation of original investment is not allowed before 3 years. The
need for NRI investments is realized by the Government of India and that is why it has made
a number of schemes for attracting their funds. Various laws have been amended to simplify
the procedures for bringing NRI funds into the country. Indian economy needs more and
more investments in every activity. Infrastructural investments are inadequate to develop a
base for accelerating industrialization. Both direct and indirect investments are allowed to
NRI’s. They can take part in industrial activity by even investing 100 per cent money in
certain areas. On the other hand they can invest in mutual fund schemes and may deposit
funds with Commercial banks which too ultimately will be used for productive purposes.

Euro Issues
After the onset of the process of globalization of Indian economy, the govt. thought it
imperative to allow the companies in India to raise funds from foreign market in foreign
exchange. It may be noted that in case of foreign capital, the foreign exchange is involved, so,
it is controlled and regulated by the RBI and the govt. Euro issues are outside the ambit of
SEBI. In November1993, the govt. announced the scheme of issue of securities by Indian
companies in capital market Financial Management & International Finance abroad. This
scheme is known as “issue of foreign currency convertible bonds and ordinary shares scheme
1993”.The scheme has been reviewed and several amendments have been made in the
scheme from time to time.
The scheme has permitted Indian companies to two types of securities:
(a) Foreign currency convertible bonds, and
(b) Equity shares through depositary receipts.
The regulatory provisions of these securities are as follows:
Foreign Currency Convertible Bonds (FCCBs): The FCCB means bonds issued in
accordance with the relevant scheme and subscribed by a non-resident in foreign currency
and convertible into depositary receipts or ordinary shares of the issuing company in any
manner, either in whole or in part, on the basis of any equity related warrants attached to debt
instruments. A company seeking to issue FCCBs should have consistent track record of good
performance for a period of three years. The FCCBs are unsecured; carry a fixed rate of
interest and an option for conversion into affixed number of equity shares of the issuer
company. Interest on redemption price (if conversion option is no exercised) is payable in
dollars. Interest rates are very low by Indian domestic standards. FCCBs are denominated in
any freely convertible foreign currency, generally in US $.
FCCB has been popular with issuers. Local debt markets can be restrictive with
comparatively short maturities and high interest rates. On the other hand, straight equity may
cause a dilution in earnings, and certainly dilutions in control, which many share holders,
especially major family share holders, would find unacceptable. Thus the low many coupon
security which defers share holders dilution for several years in form of FCCB, can be
alternative to issuer.
Foreign investor also prefer FCCBs because of dollar denominated servicing, the conversion
option and the arbitrage opportunities presented by conversion of the FCCBs into equity at
discount on prevailing market price in India.
The major drawbacks of FCCBs are that the issuing company cannot plan capital structure as
it is not assured of conversion of FCCBs. Moreover, the projections for cash outflows at the
time of maturity cannot be made. In addition, FCCBs would result in creation of external debt
for the country, as there would be foreign exchange outflow from the country if conversion
option is not exercised by the investors. Some other regulations of FCCBs are 691
(1) Interest payment on bond, until the conversion option is exercised, shall be subjected to
TDS @ 10%
(2) Conversion of FCCBs into shares shall not give rise to capital gain in India.
(3) Transfer of FCCBs shall not give rise to capital gain in India.
Depository Receipts (DRs): A DR means any instrument in the form of depository receipt or
certificate created by the overseas depository bank outside India and issued to non-resident
investors against the issue of ordinary shares. In depository receipt, negotiable instrument
evidencing a fixed number of equity shares of the issuing company generally denominated in
U.S. $. DRs are commonly used by the company which sells their securities in international
market and expanding their share holdings abroad. These securities are listed and traded in
international stock exchanges. These can be either American depository receipt (ADR) or
global depositary receipt (GDR). ADRs are issued in case the funds are raised through retail
market in United States. In case of GDR issue, the invitation to participate in the issue cannot
be extended to retail US investors.
While DR is denominated in any freely convertible foreign currency, generally in US dollars
are issued by the depository in the international market, the underlying shares denominated in
Indian rupees are issued in the domestic market by the issuing company. These shares are
issued by the company are customized in the home market with the local bank called
custodian.
An investor has an option to convert the DR into fixed number of equity shares of Issuer
Company after a cooling period of 45 days. He can do so by advising the depository. The
depository in turn, will instruct the custodian about cancellation of DR and release the
correspondence shares in favour of non resident investor, for being sold directly on behalf of
the non-resident or being transferred in books of accounts of the issuing company in the name
of the non resident.
Once the underlying shares are released, the same cannot be recustodized. In addition, shares
acquired in open market cannot be custodized. Until such conversion the DRs, which are
negotiable, are traded on an overseas stock exchange, entitled for dividend in dollar but that
carry no voting rights, yield rupee dividend and are tradable on Indian stock exchanges like
another equity shares. Some other regulatory provisions are:
i. DR may be issued for one or more underlying shares.
ii. Dividend on shares will be subjected to TDS @10%.
iii. Transfer or trading of DR outside India will not give rise to any capital gain in India.
Some of the provisions relating to euro issues are as follows:
1. Euro issue shall be considered as direct foreign investment in the issuing company.
2. There is no limit on the number of euro issues to be floated by a company in one year.
3. Investment of proceeds of euro issues cannot be made in stock market and real estate.
However, the funds can be used for prepayment of scheduled payment of external
commercial borrowings.
4. Within the framework, GDR raising companies will be allowed full flexibility in deploying
the proceeds. Up to maximization of 25% of total proceeds may be used for general corporate
restructuring including working capital requirements of the company raising the GDR.
5. The company can be required to specify the proposed end uses of the issue proceeds at the
time of making their application, and will be required to submit the quarterly statement of
utilization of funds for the approved end uses, duly certified by the auditors.
6. Currently, companies are permitted to access foreign capital market through foreign
currency convertible bonds for (i) Restructuring of external debt which helps to lengthen
maturity and soften terms, and (ii) For end use of funds which confirm to the norms
prescribed by the govt. for external commercial borrowings (ECBs) from time to time.
In addition to these, not more than 25% of FCCB proceeds may be used for general corporate
restructuring including working capital requirements.
7. Companies will not permit to issue warrants along with their euro issue.
8. Companies may retain the proceeds abroad or may remit into India in anticipation of the
use of funds for approved end uses.
9. Both the in-principle and final approvals will be valid for three months from the date of
their respective issue.
Considering the funding requirements of unlisted companies, it has been decided to permit all
unlisted companies to float Euro/ADR issue provided they fulfil the three year track record
eligibility requirement. These unlisted companies floating GDR/ADR/FCCB issues would,
however, need to comply with the standard listing requirement of listing on the domestic
stock exchange within 3 years of having started making profit.
In February 2002, the government has allowed two-way fungibility of shares issued under
the euro issues. Two-way fungibility means reissue of ADR/GDR in place of shares which
were issued by way of conversions of ADR/GDR. Some of the regulatory provisions relating
to two way fungibility are:
a) Re-issuance of ADR/GDR would be permitted to the extent of ADRs/GDRs which have
been redeemed into underlying shares.
b) Transaction would be effected through SEBI registered brokers and under the RBI
guidelines.
c) The re-issuance of ADR/GDR will takes place through custodian
d) For creation of ADR/GDR the Indian broker will purchase the shares from stock
exchanges, for which money will come from overseas buyer.
e) Overseas depositor will issue ADR/GDR to the foreign investors.
f) A monthly report of two way fungibility is to be submitted to the RBI and SEBI.
g) The two-way fungibility process is demand driven and the company is not involved in it.
Since 1994, several companies have raised foreign capital through Euro issues (both FCCB
and DR). Some of these companies are Reliance, Dr. Reddy’s lab, Indian Rayon, etc.

Benefits of Euro-issues to Issuing Company

 International capital market is very large and liquid, and can absorb issues larger size.
 Better corporate image of issuing company both in India and abroad among bankers,
customers, etc.
 Proceeds can be used for import and acquisition abroad.
 It will broaden the shareholders base and enhance investors quality.
 It normally offers better comparative share value.
 The cost of raising equity funds from international market is generally lower than the
cost domestic issues.
 It implies acceptance by sophisticated western investors which in turn would help to
enhance the image of the company and its product internationally.
Benefits of Euro-Issues to the Investors
 Euro issues are allowed to be issued only by the companies with proven track record.
 It is listed and traded in international stock exchanges in the dematerialized form and
hence is free from delivery and settlement problems.
 It is generally denominated in US Dollars and hence reduces the foreign exchange
risk.
 Dividend and interest on investment in Euro issues instruments may carry
concessional tax rates.
 Market for most of the script is more liquid and hence facilitates faster entry and exit.
 Investors in Euro-issues are not required to comply with a large number of complex
formalities and regulations normally required for investment through domestic stock
exchanges.69
CO
Issue of ADRs by an Indian Company
An Indian company may think of floating an ADR issue primarily with an intention of getting
its shares listed at NASDAQ or New York Stock Exchange. ADR issue should be attempted
in two phases:
I. Preparing for the ADR issue: Before a company goes for issue of ADRs, it has to
adequately and systematically prepare for it. It has to prepare the business plan for which the
funds are required. Next, it should get fair valuation of its equity shares. The current market
price, projected earnings and intrinsic worth will help in this matter. The company has to
prepare and redraft its financial statements for last at least 3 years as per US GAAP. It has to
empanel and select merchant bankers in the US capital market. These would include
Overseas Depository, Legal Advisors and Certified Public Accountants. The company then
has to obtain necessary approval from the government. Thereafter, it has to get itself
registered with the Securities Exchange Commission of US and the NYSE or NASDAQ
where the ADRs are planned to be listed. Then the company can proceed with the offer of
ADRs to the investors for which road shows. Presentations, conference, etc. may be planned.
ii. Offering the ADRs: The ADRs are issued through the depository mechanism. The
subscription list will be kept open as per the SEC regulations. If the company has opted for
green shoe option, it has to prepare for this also. Once the subscriptions are received in the
designated overseas banks, the company shall create shares and will hand over these shares to
the custodian in India. The depository shall issue ADRs to the foreign investors against the
underlying shares.
The foreign investors can transact in the ADRs either by selling at the stock exchange, or can
get the underlying shares handing over the ADRs to the depository. These underlying shares
can then be sold at the recognized stock exchange in India.