Regulating Foreign Venture Capital Investors

In a post on the Critical Twenties blog, Sarika raises a number of issues (both legal as well as practical) that plague the regulatory system governing foreign venture capital investors (FVCI).

Although success in innovation is usually propelled by a facilitative legal, regulatory and contractual system that allows unimpeded flow of capital to finance such innovation, the issues highlighted in the post suggest that the Indian regulators have approached the foreign venture capital regime from the point of view of suspicion rather than facilitation. Surely, there may have been cases of misuse of the benefits available to FVCI, but the entire industry is left to bear the burden of internalizing the cost of the regulator’s attempt rein in the exceptional (and possibly egregious) cases.