The committee, in its first meeting on Thursday, decided to focus on regulatory and legal aspects of the structuring of a VC fund, issues related with fund raising, investment process and exit routes, SEBI said in a statement here.

The committee, chaired by K B Chandrasekhar, an Indian entrepreneur with pioneering experience in Silicon Valley and chairman of Exodus Communications Inc, would also consider exit-related issues, including possibility of trading in unlisted securities, initial public offer (IPO) route and valuation aspects. The group, comprising representatives from venture capital funds, institutions as well as tax and legal experts, academicians and Indian entrepreneursincluding Sabeer Bhatia of Hotmail fame and committee chairman Chandrashekar felt VC was crucial for the development of financial, industrial and scientific sector in the next millennium.

The Chandrashekar committee formed four sub-groups to specifically focus on developing a vision for the domestic VC industry, structure of the fund, investment process and exit-related issues, SEBI said. These groups were expected to give their suggestions within a span of six weeks.

The committee was of the unanimous view that venture capital activity has a tremendous potential in India and could be very effective engine for economic growth specially in the area of industries based on knowledge, technology and research, it added.

The Chandrashekar committee also discussed the comparative global development, especially in the US, Israel and Taiwan where the VC industry has been instrumental in developing growth of industry, enterprise and export earnings.

The committee would also seek to identify various issuesregulatory as well as developmental relating to the functioning of venture capital industry in India and to make suggestions with a view to facilitate and accelerate the growth of the industry in India.