also be seen as a corporate strategy to promote the brand image and utilisation of raw materials available in the host country. in the indian context, overseas investments have been primarily driven by either resource seeking or market seeking or technology seeking motives. of late, there has been a surge in resource seeking overseas investments by indian companies, especially to acquire energy resources in australia, indonesia and africa. it is against this background that i intend to speak on recent trends and emerging issues in relation to indian outward fdi. i am thankful to bombay chamber of commerce for choosing this topical subject for today ’ s discussion. in my presentation, i would briefly talk about the evolution of outward fdi policy in india, trends and analysis of outward fdi, funding pattern of outward fdi, measures taken by the reserve bank of india and government of india, emerging issues and end with some thoughts on way forward. bis central bankers ’ speeches b. evolution of outward foreign investment policy in india change in policy environment across the economies has greatly influenced the outward investment pattern in the global economy. nonetheless, recognising the concerns of capital outflows, governments in different countries, particularly emerging and developing economies, have been relatively more circumspect on undertaking policy liberalisation of outward investment. therefore, it is important to highlight how the indian policy in this regard has evolved over time. in the indian context, overseas investments in joint ventures ( jv ) and wholly owned subsidiaries ( wos ) have been recognised as important channels for promoting global business by the indian entrepreneurs. the broad approach has been to facilitate outward foreign direct investment through joint ventures and wholly owned subsidiaries and provision of financial support to promote exports including project exports from india. with a steady rise in capital inflows, particularly in the second half of 2000s, the overall foreign exchange reserve position provided comfort to progressive relaxation of the capital controls and simplification of the procedures for outbound investments from india. three distinct overlapping phases as under can be discerned in the evolution of the indian outward fdi policies. phase i ( 1992 to 1995 ) : period of liberalization of indian economy guidelines on outward fdi were in place before the process of liberalisation and globalisation of indian economy in 1991 – 92. policy changes since 1992 were undertaken keeping in view the changing needs of a growing economy. understandably, the rules were quite restrictive and subject to conditions of no cash remittance and mandatory repatriation of dividend from the profits from the

the eleventh and twelfth centuries, as more and more rural folk moved to towns and cities, a new class of merchants emerged to meet the demands of the growing urban population. it was during this period that the basic concepts and institutions of modern western mercantile law ( lex mercatoria ) were formed. the self - regulation has evolved significantly since then and linkages with regulatory authorities, often on a sound legal basis, were established mainly in the financial sector. self - regulation generally imposes lower cost than official regulation whenever a shift is feasible. sros possess the flexibility to adapt to regulatory requirements of rapidly changing business environment. they provide an intimate knowledge of the markets and products. self - regulation, typically involving a unique combination of private interests with government or regulatory oversight over them, is an effective and efficient form of regulation for the complex, dynamic and ever - changing financial services industry. the role of selfregulation and, indeed, its very existence, differs from country to country, across market sectors and across the developed and emerging markets. in its most complete form, self - regulation encompasses the authority to create, amend, implement and enforce rules of conduct with respect to the entities subject to the sro ’ s jurisdiction, and to resolve disputes through arbitration or other means. the advantages of self - regulation are very clear, especially in terms of minimising the cost of regulation as well as cost of compliance of regulation in the financial sector, while improving the quality of regulation. however, there are a number of issues particularly in the financial sector which are often cited. for instance, there is a well - known observation about the “ regulatory capture ”, that is, the regulated entities, in the organised form, have a tendency to capture the regulator to protect their own interests. it is also argued that the sros protect the interests of the members if they are in conflict with interests of the system. in this regard, i find that the model for effective regulation, brought out in the report of the sro consultative committee of the international organization of securities commissions in may 2000, is useful. perhaps these issues will also be addressed in this conference as part of the way forward. let me again thank the organisers for giving me this opportunity and wish the conference all success.