Thursday, December 05, 2013: Owing to some objections by the Planning Commission, the plan of Department of Electronics and Information Technology (DEITY) to pick up a stake in a $100-million private equity (PE) fund has been stalled for the moment.
According to reports, the planning commission feels that there should be atleast two bids before it agrees to invest in a PE fund. They have become cautious of all government investments recently. Floated by global PE firm Walden International, the fund planned to invest in electronics chip design start-ups. The IT ministry proposed to have 15 per cent stake in the fund, reports Business Standard.
A senior PlanCom official told BS, “There is no problem with contribution of the government’s share, but there should be more interested players.” The suggestions by the panel will be conveyed to the high-powered committee chaired by R Chidambaram, who is the principal scientific advisor to the Prime Minister.
A DEITY official told BS that the department had received the Planning Commission’s observations and had also responded to those.
While India is planning to boost its domestic manufacturing industry by inviting investments from global majors, such a thing could impact country’s reputation globally. Also, the Electronic Development Fund was supposed to be a key initiative of the National Electronics policy, under which the department invited global funds to invest in the country with the government participating through a stake of up to 50 per cent in it.
The reason that the idea was to partner global funds instead of going solo is that electronics research and development work is highly complex and risky. “The government may have found it hard to fund private companies as it is difficult to say which will succeed and which will not. We don’t have people such as Vinod Khosla in the government, so we need to leverage the expertise of the professional fund managers,” DEITY official added.
