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               Securities and Exchange Board of India

industry enjoys the same kinds of transnational ties that has helped Taiwan.  Similarly, the Israeli venture capital industry has strong U.S. connections. Several of Israel’s experiences have relevance for India.  Government policy on incubators, the funding of R&D projects, and the BIRD project provide useful object lessons for the Indian government and business alike.

2.14Venture capital has played a very important role in U.K.,  Australia and Hong Kong also in development of technology growth of exports and employment.

2.15India certainly needs a large pool of risk capital both  from home and abroad.  Examples of US, Taiwan and Israel clearly show that this can happen provided there is right regulatory, legal, tax and institutional environment. It is also necessary that start-up’s have access to R&D flowing out of  laboratories and universities with infrastructure support such as telecom, technology parks etc. Steps are being taken at the level of Government, Ministry of Information and Technology, and CSIR for improvement in infrastructure and R&D.  Certain NRI organisations are taking initiatives to create a corpus of US$500m to strengthen the infrastructure of IITs.  More focused attempts will be required  in all these directions.

2.16Recent phenomena, partly ignited by success stories of Indians in US and other places abroad, provide the indications of a growing number of young, technically qualified entrepreneurs in India.  There are success stories within India also.  At the same time increasing number of internationally savvy, senior managers have been leaving established multinationals and Indian companies to start new ventures.  The quality of enterprise  in India is on an ascending curve. The atmosphere thus is  ripe for creating the right regulatory and policy environment for  sustaining the momentum for high-technology entrepreneurship. The Indians abroad have leapfrogged the value chain of technology to its highest levels. By bringing venture capital and other supporting infrastructure this can certainly happen at home also.

2.17Another important area is the need for multi country integration.  Information Technology and Internet have brought about the trend of what can be called the “death of distance” and operation across the countries can be seamlessly integrated.  In the Indian context with developing IT and internet technology  coupled with close linkages of Indian technocrats and entrepreneurs located in India and abroad, there are interesting possibilities.  This will of course need further regulatory and policy support to provide operational flexibility, easy entry-exit and ownership patterns to suit global needs. It is also to be noted that  the quality and quantity of research  conceptualized in startups  competes favorably with research undertaken by  big firms.  This phenomenon is seen even in India.  

Report of K B Chandrasekhar Committee on Venture Capital14

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