Venture capital in India and Their Guideline

1) IDBI Managing venture scheme established by the union
government in 1986
2) ICICI + UTI Has set up a venture finance company named TDICI
3) Canara Bank Canbank venture capital fund in October 1989
4) The ANZ Grind LaysIndian Investment Funds
Venture funding company having been supportedmainly by NRIs.

Guidelines
(a) The emphasis – new technology to the market.
(b) The project should not have been tried in the market.
(c) VC would get tax concession on capital gains.
(d) Investment deals of the VC must be approved by all India financial
institutions.
(e) The government insists on an early stage financing of project utilizing new
technology.
(f) The entrepreneurs should be relatively new in the market, technically
qualified wit inadequate resources.

IDBI and Venture Capital
a) Encouraging the commercial application of indigenously developed
technology.
b) Adopting imported technology to widen domestic applications.
The VCF would be concerned wit proposals relating to development of
technology from the level of lab or bench scale onwards till the stage where it is
matured for commercial application.
1) Setting up a pilot plant
2) Up scaling of the pilot to the demonstration scale capable of commercial
operations.
3) Technological innovation leading to quality up gradation
4) Adoptions / modifications to imported process administration
5) Cost of studies surveys

Present Scenario
1) VC prefers to finance the project later stage than at the start up stage
2) Lack of government financial support
3) Declining financial support to research & development activities.
4) Complicated procedure of commercializing the know how.
5) Lack of sufficient financial support from pension & provident funds.
6) Restrictions on financial institutions
7) Exemption on income tax
8) New to the market & assumes managerial & technological risks
9) Frequent changes in the policies of SEBI
10) Conservative attitude of the investor in taking the risk of financing

Future Prospects of Venture Capital in India
The central government in its periodical budgets encouraged venture capitalists
by offering fiscal concessions on the dividend & capital gains.
Establishing OTCEI – Over The Counter Exchange of India
Invite foreign investor to invest their funds in this industry
GOI should protect the intellectual property rights
This is essentially needed in biotech innovations

Money Market & Bill Market
Financial assets & credit instruments of different types such as currency /
cheque / Bank deposits / Bills / Bonds
Credit is generally required & supplied on short term / long term basis.
The financial markets are broadly divided into two categories…
(a) Money Market
(b) Capital Market