The private equity (PE) and venture capital (VC) expert committee, proposed in the Union Budget 2022, has the potential to enhance India’s national competitiveness, said Gopal Srinivasan, CMD, TVS Capital and Senior Board Member, IVCA.
“We are at a position right now, especially with this unfortunate war that is going on, that it (expert committee) can accentuate India’s national competitiveness. It is not about frictionless scaling of the industry. [It is] about how do we convert the talent in this industry to support our great entrepreneurs with the government actually thinking that regulation is a competitive advantage for the nation rather than doing any industry favour by doing any industry friction,” he said while speaking at a panel on the IVCA Conclave on Tuesday.
Finance Minister Nirmala Sitharaman had proposed in her Budget speech that the government will set up an expert committee to examine and suggest appropriate measures to scale PE and VC investments in India.
Srinivasan said policy initiatives like SEBI’s Alternative Investment Policy Advisory Committee (AIPAC) and the Insolvency and Bankruptcy Code (IBC) and their effective implementations give him the confidence that the expert committee will have the potential to create the next practice in regulations, like how the government could rollout national identify program Adhaar and payment platform UPI.
“Why am I, as an Individual, as an Indian, as PE/VC player, confident? I’m sitting here in 2022, managing close to $300 million of Indian money, only Indian money. This is something that I could never have imagined in 2007-08. The manner in which AIPAC and IBC was rolled out gives me the confidence that this expert committee definitely has the potential of pulling off made-for, fit-for-purpose bespoke AIF for India and foreign funds investing in India with their own unique tax,” he said.
In the Union Budget, Sitharaman had also announced that the government will encourage creation of more Fund of Funds, which will be managed by private fund managers, to accelerate start-up investments. Government will contribute about 20 per cent of capital in such Fund of Funds.
Gopal suggested the committee should draw a roadmap to get permanent capital, get institutional money into funds through a blended finance program and attract retail investors to funds.
“We need to fundamentally let the institutional capital in, for which I think the government’s approach of blended finance, 20:80 formula, and creating more Fund of Funds is needed. Initially you need that kind of training wheels of fund of funds where 20-30 per cent can come from National Pension Scheme (NPS), Employees Provident Fund Organisation (EPFO), and charitable endowments. Equally, I think we need to democratise fundraise. Blended finance may allow that. We need to attract the retail investor money and I hope the expert committee can apply its mind of these kinds of frameworks as well,” he said.
“We should be exporting fund management talent through an institutional platform. The IT story replicates that India leads the world. I want the Indian GPs (General Partners) dominate the world,” he added.
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