Fvcis To Be On Par With Fiis

D R Mehta, chairman, the Securities and Exchange Board of India (Sebi), said foreign venture capital institutions (FVCIs) will be treated on par with foreign institutional investors (FIIs) in the matter of investing in India.

According to him, while foreign institutional investors (FIIs) were allowed benefits in the secondary market, there was reason to extend similar benefits to FVCIs as well, since they were also involved in creating additional wealth.

"FIIs invest in the secondary market. Here, foreign venture funds would be helping create additional wealth. There should, therefore, be similar benefits to them as well," Mehta pointed out.

He said Indian funds still did not have experience of the venture capital industry, while FVCIs had experience as well as capital. "Indian funds would give assistance like soft loans. Foreign funds would come with a whole package", he said.

Mehta expects a whopping $1.5 billion to come into the venture capital industry even before 2000-01 is over.

He said in addition to the venture fund clarifications were the clearing of employee stock options (ESOPs), which were now cleared as not being perquisites. The two _ venture funding and ESOPs _ were part of an overall Sebi initiative, he said.

Sebi would be the sole regulator for venture funds, and Sebi is in talks with the Reserve Bank of India and the government to clarify all the issues relating to regulation of venture funds.

Already, the issue of distribution tax and pass-throughs have been clarified by the government, paving the way for the quick introduction of venture fund regulations in the country.

Earlier, speaking at a seminar on "E-commerce and stock trading" organised by the Indian Chamber of Commerce (ICC), Mehta said Sebi was readying to usher in Internet trading in India soon. "As many as 3.5 lakh people in India have Internet connectivity. 100 intermediaries have launched or are about to launch products related to Internet trading," he said.