India needs improved regulations for private equity: McKinsey

Says realised gross returns after 2007 have dropped to just 7% from 21% in the previous years

Private equity investors in India have seen their returns erode sharply since the global financial crisis and need regulatory changes that make it easier to invest and exit from companies, consulting firm McKinsey said in a report on Wednesday.

McKinsey said realised gross returns after 2007 have dropped to just 7% from 21% in the previous years, citing various factors including a slowing economy and expensive valuations.

That has meant private equity investors still have $75 billion under investment in India from the more than $103 billion invested between 2001 and 2014, McKinsey said.

McKinsey said India needed to create "an enabling environment for overseas investors" by simplifying delisting norms, setting up "a robust court receivership process," and providing a more certain tax regime among other factors.

"As the general economic sentiment in India turns positive, the country's private equity industry has a real opportunity to regain its past vibrancy and move towards making an even greater impact on the economy," McKinsey said in the report.