Regulations cramping PEs

Private equity investors, who invested $17.13 billion (Rs 68,520 crore) in 339 deals in India in 2007, consider regulatory issues to be the most important barrier to investment, according to a KPMG survey on Private Equity Investing in India.

Forty two per cent of respondents said RBI’s tight monetary policy was preventing them from accessing debt for their deals. The same number complained that tax-related litigations took an inordinately long time to resolve.

“The barriers to PE investments should be seen in the context of India’s potential to attract private equity. A country of India’s size should attract investments of $50-100 billion (Rs 2,15,000-4,30,000 crore) a year,” says Vikram Utamsingh, Head of Private Equity, KPMG India.

Gulpreet Kohli, Principal, ChrysCapital, says India’s regulatory environment has changed for the better, though there are still restrictions on dealing with sectors like banks, real estate and retail. From July 2007 to December 2010, India is likely to receive total PE investments of $48 billion (Rs 2,06,400 crore at current exchange rates), says a separate study done by Evalueserve.

—Kapil Bajaj