Budget 2012: Entrepreneurs may find fund-raising easy with removal of restrictions for VCs

17 Mar,2012

By Paramita Chatterjee


The eco-system for early stage companies is set to improve as the FM proposes to remove restrictions on venture capitalists, who earlier gained tax benefits on investments in nine specified sectors. The removal of this sectoral cap will make fund raising easier for entrepreneurs going forward.


Besides, the proposal to float a Rs 5,000 crore India Opportunities venture capital fund with SIDBI to help start-ups is seen as a step to benefit micro and small enterprises (MSMEs) across the country. As per estimates of Federation of Indian Micro and Small & Medium Enterprises (FISME), there are currently 26 million MSMEs present in India, of which only 5% has access to institutional funds. “Any kind of equity support to MSMEs is welcome as it was greatly needed,” said Anil Bhardwaj, secretary general at FISME.


However, analysts feel the amount is still too little. “The initiate to set up a fund for MSMEs is good but the budget allocation is small,” said Raja Lahiri, partner at advisory services firm Grant Thornton. But overall, its a good start, as currently not many MSMEs would require capital for expansion, said Bhardwaj.


Source:The Economic Times

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