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NMCC proposes a $1Bn fund to encourage telecom equipment manufacturing in India

Indian government is setting up a $1 billion venture capital fund (Rs 6,200 crore) to encourage manufacturing of telecom equipment and devices, reports Hindu Business Line. The plan has been floated by National Manufacturing Competitiveness Council (NMCC) and it will soon be sent to Prime Minister Manmohan Singh for approval. According to the report, NMCC also plans to rope in Vinod Khosla, Sam Pitroda and Gururaj Deshpande to be part of the investment committee of the proposed fund, that will focus on technology innovation and not return on capital. The promoter of the company will have full control of management, subject to a review by the expert committee. However, the fund will maintain an equity holding above 51% to prevent any foreign entity from gaining control over the firm. Fear of the videsi haath (foreign hand) One point that sticks out in the whole proposal is the insistence that the fund set up by the government will have equity control of more than 51% in these companies to avoid acquisition by a foreign company, which is quite bizarre in 2014. Such a policy would have made sense in early 90s when India was still getting used to being part of a global economy. Such a policy makes sense in the case of highly sensitive technology such as the one used by military or for nuclear research, but for telecom equipment? Seriously? Redundant policy? This proposal needs to be integrated into the National Electronics Policy that the government had rolled out in 2012, to encourage domestic companies to…

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