After a meeting with over 20 venture capitalists, including institutions and overseas bodies, Sebi executive director L K Singhvi said the group felt the need to harmonise regulations governing venture capital funds (VCFs).

Currently, VCFs are governed by Sebi and CBDT guidelines while activity of overseas VCFs are also subject to government and RBI approvals. Venture capitalists also expressed the need to align the interests of overseas VCFs and domestic VCFs, especially in matters of taxation and bring about a level playing field in the industry.

Overseas VCFs who route their investments in India through tax havens like Mauritius enjoy certain tax benefits. Tax benefits to this industry also differdepending on the size of the fund. The group also discussed exit routes available for VCFs and for investors in VCFs and felt that these need to be simplified.

In order to ease exit routes for venture capital funds the regulator would also explore the possibility of extending buyback benefits, Singhvi said.

The group was also of the opinion that guidelines should not restrict VCF investments to equity alone but also allow debt investments. The group also discussed the possibility of regulating overseas VCFs in line with foreign institutional investors (FIIs) rather than subject these funds to repeated approvals from the foreign investment promotion board and RBI.

They also stressed the need for greater bank and institutional funding of start-up ventures and support innovative ideas. ``Sebi's role in these discussions will be more as a facilitator to further the growth of this industry,'' Singhvi said.