Government to revise norms for venture capitalists

Mumbai: The government is set to revise regulations governing the venture capital industry but would take care not to upset the fund flow brought in by the venture capitalist.

''We have already held talks with the SEBI and catalogued the practices followed in other countries like Israel for regulation of venture capital funds,'' KP Krishnan, joint secretary in the ministry of finance said at the launch of Venture Capital Association of India (VCAI).

''Nothing in the law today mandates a venture capitalist firm to be regulated and registered. I think it's a regime we need to revisit,'' said Krishnan.

He added that a mechanism should be found for making it mandatory for VC firms to register though they should have the option to decide if they don't want to be regulated.

As per the Quarterly India Venture Capital Report published by Dow Jones 'VentureSource', Venture Capitalists have invested $928 million in 80 deals for entrepreneurial companies in India during 2007 - a 166 per cent increase over the $349 million invested in 36 deals in 2006.

The domestic players were unhappy with the present policies as the foreign venture capitalists had an edge over them as many of the policies was lopsided and favoured the foreign venture capitalists, he said.