Private Equity Funding in India – Issues and Challenges
Private Equity Funding in India – Issues and Challenges
Swati chauhan
Swati.chauhan09@gmail.com
Krishna business school kanpur
1. Introduction
India is the largest democracy in the world. Its main strength is availability of abundant skilled and cheap manpower. The country has been on growth trajectory in all fields as a planned economy thus becoming a safe and attractive destination for foreign investment. Currently, in terms of Purchase Power Parity, it is the fourth largest economy and tenth most industrialized country in the world. Successive Governments had taken major initiatives for industrial development, simplification of investment procedures, enactment of investor-friendly laws, liberalization of trade policy, safeguards of intellectual property rights, liberalization of exchange regulations, reforms in Capital and Stock Markets, etc. Ever since Indian economy underwent series of reforms from 1991, there have been progressive steps in banking, finance, industry, investment climate, incomes, employment, legal environment, etc. India is shining with an average growth rate in GDP at about 9% pa. Investments from FIIs, increased FDI in several sectors, surging Foreign Exchange reserves, controlled inflation rate, deregulated interest rates, etc., have been witnessed in recent years. GOI recognizes the key role of FDI for economic development and as an important source of technology and global best practices. Capital Market has undergone dramatic changes, with SEBI as regulator, yielding returns to all segments of investors – retail or wholesale. Information Technology is playing a vital role in effective functioning of all the players.
2. Private Equity
Private Equity, which is a sub-set of Venture Capital, is medium to long-term finance provided in return for an equity stake in potentially high growth unquoted companies. This informal method of financing became an industry globally in the late 1970s and early 1980s in the
Swati chauhan
Swati.chauhan09@gmail.com
Krishna business school kanpur
1. Introduction
India is the largest democracy in the world. Its main strength is availability of abundant skilled and cheap manpower. The country has been on growth trajectory in all fields as a planned economy thus becoming a safe and attractive destination for foreign investment. Currently, in terms of Purchase Power Parity, it is the fourth largest economy and tenth most industrialized country in the world. Successive Governments had taken major initiatives for industrial development, simplification of investment procedures, enactment of investor-friendly laws, liberalization of trade policy, safeguards of intellectual property rights, liberalization of exchange regulations, reforms in Capital and Stock Markets, etc. Ever since Indian economy underwent series of reforms from 1991, there have been progressive steps in banking, finance, industry, investment climate, incomes, employment, legal environment, etc. India is shining with an average growth rate in GDP at about 9% pa. Investments from FIIs, increased FDI in several sectors, surging Foreign Exchange reserves, controlled inflation rate, deregulated interest rates, etc., have been witnessed in recent years. GOI recognizes the key role of FDI for economic development and as an important source of technology and global best practices. Capital Market has undergone dramatic changes, with SEBI as regulator, yielding returns to all segments of investors – retail or wholesale. Information Technology is playing a vital role in effective functioning of all the players.
2. Private Equity
Private Equity, which is a sub-set of Venture Capital, is medium to long-term finance provided in return for an equity stake in potentially high growth unquoted companies. This informal method of financing became an industry globally in the late 1970s and early 1980s in the
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