Orissa to set up VC fund for IT firms

Taking a leaf out of Karnataka, Orissa is exploring the possibility of setting up a Venture Capital Fund (VCF) for small and medium IT enterprises in the state.

This is in line with plans to set up a National Venture Capital Fund (NVCF) for IT SMEs, which is currently pending with the Planning Commission.

The Karnataka government has already set up a VCF with the Small Industries Development Bank of India (SIDBI) with a corpus of Rs 15 crore to promote the Software Technology Parks of India (STPI). Known as the country's silicon valley, Karnataka is the first state to accept the NVCF proposal and has become a role model for other states.

Currently, Orissa STPI has a catalogue of 100 registered IT/ITeS companies, of which only five per cent are in the big league and the remaining are IT SMEs. State STPI officials said they were aware of the NVCF formation proposal and are already making efforts to establish a state venture capital fund (SVCF).

A highly placed official said, "We are talking to the Orissa government, especially the IT department, on the possibility of setting up a SVCF. This would benefit the 95 per cent IT SMEs operating out of the state."

Senior officials said matters on those lines are currently being explored into. According to STPI estimates, Orissa's software exports stand at Rs 465 crore and officials are confident that with the surge in IT companies, the exports would cross Rs 650 crore.

Interestingly, 85 per cent of Orissa's software export earnings are from Infosys and Satyam - both long time players. Of late, TCS, Wipro, MindTree and Hexawire are also planning forays into the state. According to STPI estimates, Rs 1000 crore has been invested in the IT/ITeS sector in the state.

India's software exports are pegged at Rs 1,08,000 crore, of which Karnataka alone contributes Rs 37,000 crore followed by Maharashtra and Tamil Nadu. West Bengal and Orissa are in the eigth and ninth positions respectively.

STPI officials are working closely with their counterparts in Karnataka to work out the SVCF model with assistance from the Orissa government. The SIDBI model would work depending on which bank or financial institution the state government would tie up with. The corpus would be determined after detailed discussions.

A STPI official said, "Things are at a nebulous stage. We are trying hard to make things work out soon." The STPI has requested the Orissa government for three acres to set up technological incubators, which would facilitate IT SMEs. It would be an one umbrella facility with rooms, space common voice and other ready-to-use facilities.