In order to encourage domestic technology in the manufacturing of telecom equipment and devices, the National Manufacturing Competitiveness Council (NMCC) has floated a plan to set up a billion-dollar venture capital fund. The NMCC notified that the fund will invite proposals in a transparent manner and select a few consortiums, pre-dominantly comprising Indian-origin scientists and technologists and the total cost of the start-ups, from conception to proof of concept and then manufacturing, will be met through equity infusion. NMCC’s notification is currently under the consideration of the Department of Telecom (DoT).
As per the NMCC’s proposal, venture capital fund will provide 85 percent of the equity without management control and the remaining 15 percent would be provided through the selected entrepreneurs in the form of sweat equity. The promoter of the company will have full control of management. Further, the notification added that if the start-up does not succeed in the venture, the money given will be written off, but in case the venture becomes commercially viable then the proposed fund will maintain an equity holding above 51 per cent to prevent any foreign entity from gaining control over the firm.
The NMCC’s latest move is aimed to make India a global technology manufacturing hub. In spite of being a major consumer of telecom network and device products, India presently imports almost all of its telecom requirements. However, the government has also taken several measures like preferential market access policy in order to boost local manufacturing, but not much investment has come in till now.