BackSebi proposes hike in foreign investment limit for venture capital funds
The proposal to increase the limit from 10% to 25% is applicable to investments with an Indian connection
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Mumbai: Markets regulator Securities and Exchange Board of India (Sebi) on Friday proposed to enhance the investment limit for venture capital funds (VCFs) from 10% to 25% in offshore venture capital undertakings with an Indian connection.
Sebi, in a consultation paper, said that it has received representations from the industry on this issue.
“Many Indian entrepreneurs have been setting up their headquarters outside India with back-end operations and/or research and developments being undertaken in India. Therefore, there is a need to allow higher overseas investment by VCFs more than existing 10% limit. The representations also state that such investments would provide opportunities to the funds to generate better returns globally, getting exposure to the international markets practices," said Sebi’s consultative paper.
The paper said since such investments are required to have an Indian connection, it will generate indirect benefits to India by bringing in foreign capital resources, technology upgradation, skill enhancement, new employment and so on.
Sebi has sought public comments on the proposal by 7 May.
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