http://www.economictimes.com/today/25netw05.htm
Government helps Indian tech ventures abroad
By Dev Khare
At a time when Silicon Valley-based venture capitalists are looking to
fund
Indian entrepreneurs' bright ideas, India's government and
semi-government
financial institutions and bodies have decided to head west. The
Department
of Electronics (DoE) responsible for the IT industry, and the Small
Industries Develop-ment Bank of India (SIDBI), have come up with new
proposals to help Silicon Valley-based Indian entrepreneurs.
DoE and Sidbi have announced plans to set up a Rs 1 billion ($23.8
million)
fund, in partnership with SIDBI's parent, the Industrial Development
Bank of
India (IDBI), to promote technology companies in India. SIDBI will bring
in
half the fund, while the DoE and IDBI will contribute Rs 300 million and
Rs
200 million each.
Sidbi has has also announced plans to launch a $50 million off- shore
fund
targeted at Indian-owned companies abroad. Like earlier Indian
state-specific funds launched in collaboration with regional
governments,
both new funds will be focused on IT investees.
DoE officials told Asian Venture Capital Journal (AVCJ) that it is
setting
up a separate asset management company, Sidbi Venture Capital Company
Ltd
(SVCCL), to run the funds.
The DoE's other plans include promoting a model Business Development
Centre
in Silicon Valley to help domestic technopreneurs find a foothold in the
US
during start-up stages.
"Indian businessmen who want to make it big in the Silicon Valley can
use
this Business Develop-ment Centre concept for their initial start-up and
marketing ventures in the US," says Gupta. "Once they have established,
they
can move forward."
However, the service will not be free. Once a company reaches a
comfortable
position to stand on its own legs, it will repay a part of its debt to
DoE
as a fee. The modalities are still being worked out.
Apart from managing the new funds, SVCCL is also expected to oversee the
smooth operation of Sidbi's other existing and future funds. The set-up
is
already underway: the bank has appointed a new CEO, Rakesh Rewari, for
the
asset management company. The proposal has also received a green signal
from
the government, by way of a cabinet clearance.
Sidbi's proposed $50 million off-shore fund will help Indian small-scale
infotech companies access international markets. In line with the latest
trend among Indian hi-tech companies looking at global opportunities,
the
fund will also focus on tapping local entrepreneurs setting up or
acquiring
off-shore companies or forming joint ventures abroad.
Source: AVCJ October 1999