Project Finance In India}

Submitted by: Anish Mahal

India has been a rapidly upcoming industrial country since multiple years. With the rapid industrialization multiple projects have been upcoming simultaneously. Multi-dimensional growths in business have put forward the future of business firms and corporate and this has actually created the need for financing activities in the projects field. Finance is the backbone of every economy and similar is the case with a developing country like India. Raising capital and financing multiple projects through various funding sources is the base for project finance in India.

With diversification and development there has been a boom in the number of Project finance companies dealing with funding sources in India. In India, project finance has emerged as a separately remarkable domain. This enjoys a leadership position with respect to financing aids to the projecting sector on a large scale. In a country like India while starting an ambitious new project, the main issue that arises is Funds. Project finance is the ultimate God for all such queries that lends money for projects of every domain right from smaller, medium sized to large scale.

Certain advantages of project financing in India:-

The major advantages of dealing with project financing are that it lends a high capital value with which a single party is not able to take up.

This not only aids with finance but also helps to minimize the bulk amount that is basically needed with large projects.

This facilitates various niche related to projects like- diversification, expansion, diversification and modernisation.

Project financing is an aid that forms as a balancing act between the demands and needs of project building in India.

Arranging funds for projects has no more been a cumbersome process with the multiple project financing bodies working in the same stream for a single purpose and ease of prospective clients.

Multiple banks and financial organisations have created a separate branch associated with project financing for multiple projects and its needs.

Easy processing and documentation process has made it even more worthwhile with ease facilitation and favourable returns.

Favourable rates of interest for assistance and funds association has also reduced the burden on clients as in case of regular loans.

Basically a project financing model is based on the following types of methods or choices. The project manager chooses from either of the combination or single entity based methodology as below mentioned:-

Term loan

Debenture capital

Commercial banks

Bills discounting

Seed Capital

Government Subsidies

Being a long term financing aid for the infrastructure and industrial projects, project finance companies has spread its roots in the entire country. This has not only eased the project building process but also multiplied the rate of expansion rapidly. With the feature it has become easy to structure the debt and pay back with from the cash earned from the project itself. Basically its a different type of finance facilitation where the amount accrued is re-paid entirely from the project cash flow rather than the assets or project creditworthiness. Thus in order to build the dream project with heavy investment needs project financing is definitely a suitable exercise.

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