Finance Ministry sets up committee to suggest regulatory measures on investments by PEs and VCs

The Finance Ministry has set up a committee that would examine and suggest measures to address regulatory and other issues to enable the scaling up of investments by venture capital and private equity investment firms. The ministry in an official order dated 9 September said the committee will comprehensively study, using a systems approach, the end-to-end frictions and potential accelerants from regulatory policy and taxation to facilitate ease of investing and to encourage “investments in India.” 

The committee will also formulate regulatory measures in addition to emulating the best global practices. The workings of this “expert committee” will be coordinated by Syed Zubair Naqvi, Joint Director (DI), DEA. 

The expert committee includes Meleveetil Damodaran, former Chairman of Securities and Exchange Board of India (SEBI); G Mahalingam, former whole-time member of SEBI; DP Nagendra Kumar, former member (GST), CBDT; Ashish Verma, former Principal Chief Commissioner of Income Tax; Poonam Gupta, Director General, National Council of Applied Economic Research; Prabhat Ranjan Acharya, Director at Arun Jaitley National Institute of Financial Management.

The announcement from the ministry has come just days after several media outlets reported that the SEBI has reportedly reached out to private equity and venture capital firms urging them to share information regarding their valuation practices and processes, indicating that high valuations of the start-ups may come under the scanner in the coming times. 

This year, the funding in the startup ecosystem has also seen a decline as compared to previous years. According to an Ernst & Young report, PE/VC investments in the country in July this year were the lowest in over a year, both in terms of value and volume, standing at $3 billion.

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