A high level group set up to study the proposal of Walden International to set up a venture capital fund has recommended government participation in the fund for fabless design on a non-exclusive basis to the extent of 15%.
Walden International Semiconductor Ventures, LP is expected to invest between $5 million to $10 million in its India arm and plans to invest in electronics chip design start-ups. In order to incentivise domestic electronics manufacturing, the government proposed to set up an Electronic Development Fund under which global funds are being invited to invest in the country with the government participating through a stake of up to 50% in it.
As an anchor investor, government has asked for some special rights such as an option to acquire at market rate some of the investee companies that may develop products that are considered of national interest or are of strategic importance.
"Government will have representation in the investment committee," the note reviewed by Business Standard said. For those companies identified as of strategic interest, government would have a right to co-invest along with the fund.
The fund ia also expected to not invest in other funds and only in companies for the purpose for which it is intented.
In order to evaluate the proposal, the government had formed a high level group under the chairmanship of R.Chidambaram, pricipal scientific advisor to government of India. The seven member committee includes Ajay Shankar, member secretary, NMCC, Saurabh Srivastava, founder chairman of Nasscom, Shyam Ponappa and Juzer Vasi of IIT Bombay.
However, the proposal had hit the Planning Commission
roadblock. The plan panel, which has recently become very careful before signing off all government investments, wanted more than one player to be evaluated before the final approval.
Over the past two years, the department has unveiled various policies to incentivise domestic manufacturing under the National Policy on Electronics, 2011. The Electronic Development Fund was supposed to be one of the key initiatives of the policy.
The mandate of the group, which was supported by joint secretary of the department of electronics and information technology, was to consider the approach and further action with respect to the proposal. It also inlcuded recommending the terms and conditions of the support to the proposal of Walden International.
