PE, VC Industry Urges Government To Allow Perpetual Fund In India: Report

PE, VC Industry Urges Government To Allow Perpetual Fund In India: Report

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The private equity and venture capital industry has urged the federal government to allow perpetual funds to operate in line with the global requirements in India, as per a Mint report.


Nirmala Sitharaman Twitter handle

As per reports, during a meeting with finance minister Nirmala Sitharaman, representatives of the Indian Venture and Alternate Capital Association (IVCA) put forward that the Centre should announce some measures during the budget announcement for 2023-24 to bring in parity in taxation and allow blended finance models to operate with multiple funds of funds.

The IVCA expert committee solicited the minister to allow perpetual capital vehicles in order to unwind the capital flows from long-term investors such as family offices, corporates and insurance companies.

The committee headed by Srinivasan asked Sitharaman to consider the demands of the industry and offer the top priority to parity in taxation.

“There are actually long-term buyers who would quite let compounding impact play on their investments and can proceed to help the businesses for longer intervals with non-public capital. Such buildings will assist us unlock these capital flows,” Gopal Srinivasan, founder of TVS Capital and senior board member of IVCA, said in his presentation.

“There is a need to remove the disincentive present in supporting entrepreneurship in unlisted enterprises. Having parity in the treatment of securities will increase the capital allocated to investments in new asset creation that generate jobs and boost the economy,” IVCA said during the presentation. Mint has seen a copy of the presentation to the finance minister.

Additionally, the industry also asked the government to look into the tax treatment of specific features of alternative investment funds (AIFs), such as separate legal forms for AIFs and the need to recognize their operations in Indian law with a systematized uniform framework that would help avoid legal challenges and inadvertent consequences, which the industry is currently exhibited to, the report added.

It also urged the minister to ease taxation rules for worker inventory possession,as many startups use it as an incentive to hire good talent. Srinivasan asserted these are all long-standing demands of the industry.

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