Thursday, August 7, 2008

New Investment norms for Venture Capital, Private Equity and Hedge Funds

The government is seriously reviewing current investment norms and may soon release new investment norms for venture capital (VC), private equity (PE) and hedge funds. The idea behind such a move is to make them operationally transparent and create a level-playing field for both the domestic and foreign players.

The discussion with SEBI has already been initiated. The motivation is to promote all sectors rather than few specific sectors like real estate which is attracting huge fund inflows.

Government is considering tax-incentives for organizations investing in high-risk venture areas. The bias between domestic players and foreign players would also be rationalized in the new system. Domestic players need to pay tax for sectors other than 9 identified by the Government while foreign players enjoy tax-benefits for other sectors too.

SEBI will make it mandatory to register VCs and PEs after compiling data about their investments in sectors like real estate, ITeS, education. SNI director TC Nair said that at present the market regulator has no definite source about the exact investments of PEs and VCs.

1 comment:

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