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|January 27, 1999||
Priya Ganapati at NASSCOM '99, Bombay
The government's Department of Electronics is setting up a Rs 1 billion venture capital fund for the information technology industry.
The DoE and a few entrepreneurs who are yet to be identified will bring in Rs 400 million. Another Rs 400 million will come from Small Industries Development Bank of India. The Industrial Credit and Investment Corporation of India has promised the remaining Rs 200 million.
The fund, which will be set up under the Indian Trust Act, is expected to take off by March.
Surprisingly, though NASSCOM '99 is an industry jamboree, the star of the meeting on the very first day was the government. It had to be. The babus from New Delhi, not only promised the moon, but showed the Black Ties how they could get there.
Venture capital, cyber laws, the 'Limited Partnership Act' and some real juice for ERNET is all happening within the next month and an year.
For software companies that lack assets, which cannot be mortgaged easily, venture capital is the only salvation.
Explains Department of Electronics Secretary Ravindra Gupta: "You have bright people, bright ideas, but they have no collateral to offer. And standard banking does not offer them money because there is no collateral. We hope that venture capital will change this. We also want to convince banks to look at the operations of software companies, the kind of exports they do, the sale in domestic areas and then fund them. Banks should not insist on collateral for software companies as they cannot have any."
But Indian legislation makes venture capital very difficult to obtain and often locks out the option altogether.
That too is set to change. Government and industry leaders at NASSCOM '99 also announced drafting of a 'Limited Partnership Act' that would make venture capital very easy. The concept of 'limited partnership' allows an investor to offset his losses in one business over gains in another.
Now, because the venture capital business is the business of investing in several businesses, it would be more pragmatic to gauge their success by looking at the overall status of investment rather than toying with individual bets.
This is where 'limited partnership' comes to the rescue. The new legislation means easier venture capital. That in turn makes better, bigger, faster software industry.
The next thunderbolt from New Delhi was about abolishing 'par value', or 'face value', that is assigned to company shares on Indian bourses.
That means you don't talk anymore of a face value of Rs 10 on a share that is selling for Rs 1,000! The value of a share is finally what the share is really worth.
But here, probably, lies a catch. When probed, Gupta stepped aside to tell Rediff that the 'par value' is being abolished for only the "knowledge based companies".
However, he had no explanation of how "knowledge based companies" would be interpreted. He could only say that "For now, IT companies would be considered 'knowledge based' companies." He also told this correspondent that the ordinance for removing 'par value' has already been issued and the bill would probably be taken up in the budget session of Parliament.
Noise over signalWe are supposed to be indebted by the gesture of Maharashtra Chief Minister Manohar Joshi and Industry Minister Leeladhar Dake who adjourned a cabinet meeting 45 minutes early so as to be on time at NASSCOM '99.
Nevermind the fact that they arrived exactly 45 minutes late and finally inaugurated the conference at 12 noon, minutes before a coffee break.
However, the consolation is there that this delay in the proceedings was for the all-important announcement that the CM had to make: "Maharashtra was the number one state to focus on IT. In terms of software exports the state contributed Rs 3,500 crore (Rs 35 billion). Also, we will complete the construction of 50 flyovers in the next 14 months. We have also built 50 lakh (5 million) toilets in the last two years."
Wow! The information highway needs flyovers too. Doesn't it? As for the toilets? Well, when you have to go, you have to go. Now it all fits in together.
From the CM, we now move on to the President, NASSCOM's that is.
Dewang Mehta is emphatic that all the executive council members of NASSCOM are angels. Perhaps, after all they are the guys who do all the lobbying for the industry. But Mehta surprised his audience when he included the CM on his angel list. To top it, he called the CM a cybervisionary too.
An angelic cybervisionary who builds flyovers and toilets for the information highway? That's something.
This is also 10 years of NASSCOM. Good na?
But that means Rs 350 for a memento. You also have a choice between a white T-shirt and a mug. (Psst! They sold only three shirts and two mugs by the end of the day).
A fellow scribe to Mehta: Kya Mr Mehta kuch bik nahin raha hai?
Mehta (smug): Bik nahin raha hai to kya hua, end mein hum free mein de denge.
So hold the purse strings friends ;-)
NASSCOM '99 coverage:
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