Foreign VC investors cut telecom allocations by 97% since 2018-19

Overall investment across sectors remains higher in 2022-23 than before

Foreign Venture Capital (VC) investors cut their exposure to the beleaguered telecommunication sector by 97 per cent during the Covid-19 pandemic, marking one of their biggest cuts among large sectors.

The overall exposure fell from Rs 4,923 crore in March 2019 to Rs 166 crore in March 2023, according to data. The Securities and Exchange Board of India (Sebi) provides information on foreign VC investors on a periodic basis. Other major sectors have also seen a decline in allocations since March 2019. Information technology had investments worth Rs 4,457 crore in March 2019. This fell to Rs 3,448 crore in March 2023. Other sectors which saw a decline in allocations include biotechnology, media and entertainment, services, and industrial products.
 

There has been an increase in the share of allocations towards the pharmaceutical sector from Rs 177 crore to Rs 656 crore in the same period (chart 1). The share of allocations to sectors outside those identified in regulatory criteria has gone up. The share of others has gone up from 74.4 per cent in March 2019 to 87.7 per cent in March 2023.

The number of foreign VC investors has declined in the last one year. It dropped from 279 in 2021-22, to 269 in 2022-23. This is the first such drop seen in recent years. The overall number of investors remains higher than it was before the pandemic. There were 248 in 2018-19 (chart 2).

The total amount that they invest has gone up. Foreign VC investors allocated Rs 42,090 crore in March 2022. This has since risen to Rs 45,786 crore in March 2023. This is 23 per cent higher than in 2018-19 (chart 3).