Plan Panel Report outlines steps to boost Venture Capital

New Delhi,July 19 (UNI) To boost projects involving Venture Capital funding, a Planning Commission Committee today made a host of recommendations to strengthen the research-finance-entrepreeurship network, including opening the doors wide to domestic funds managers to raise the supply of risk capital.

"So far the funding of Venture Capital(VC) projects has by and large been by Foreign Institutional Investors (FIIs). It is now desirable that if seed and early venture capital funds are to take off, banks, financial institutions and pension funds should not be debarred from VC investments", Dr Nitin Desai, Chairman of the Committee on 'Technology Innovation and Venture Capital", told a press conference here.

The report of the committee was submitted by Dr Desai to Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Dr Desai, former Finance Secretary and Under Secretary General, United Nations, said in the domestic sector only government funds and domestic personal funds are available for seed and early stage investments.

The committee, therefore, has recommended that the government relax constraints on institutional investment in domestic venture funds, starting with institutions, which were earlier allowed VC investment.

On receiving the report, Dr Ahluwalia said implementation of the recommendations of the committee would lead to an increased flow of VC funds for commercialisation of technology ventures, particularly those emnating from incubation centres of univesrities and R&D centres.

"Technical progress is the key driver of growth and developmenty," Dr Ahluwalia said and added that with the opening up of the economy to greater domestic and international competition, Indian industry has to move to the frontiers of known technological options.

The committee has recommended that SEBI should register groups of high net worth individuals located in India or overseas, who meet the criteria of being independent investors, as accredited investors and offer them the same rights, including tax pass through priveleges, as registered VC firms.

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