To promote local technology in telecom equipment making, the National Manufacturing Competitiveness Council (NMCC) plans to set up a Venture Capital fund with a billion-dollar (Re. 6000 Crore) corpus. There is a proposal to draft Indian venture capitalists like Vinod Khosla, Sam Pitroda and Gururaj Deshpande to come on board the investment committee.The fund will invite proposals in a transparent way and select mainly Indian-origin scientists and technologists. The start-up project, from concept to manufacturing, will be almost fully financed by equity infusion.
As per the NMCC proposal, the fund will provide 85 % equity without management control, with the rest being provided by the selected entrepreneurs as sweat equity. The promoter will enjoy full management control, subject only to an expert committee review. In case the start-up fails, the money given will be written off but if it becomes commercially viable, the fund will maintain an equity holding above 51 % to prevent any foreign entity from gaining control. The fund will look at revoltionary technologies, and not the return on capital, to measure success.
The move is a bid to make India a technology manufacturing hub at the global level. India is a major consumer of telecom network and device products but almost all its requirements are currently met from imports. Despite many policies to encourage local manufacturing, not much capital has trickled in till now. The mobile handset segment has seen some investments by Nokia and Motorola but the investments have declined in the last one year.