The Narendra Modi government’s new proposal of a Venture Capital Fund (VCF) dedicated for defence industries is a reaffirmation of the Centre’s “fetish for funds”, writes Raghav Bahl, co-founder and chairman of Quintillion Media, in a column for Bloomberg Quint.
This fetish, he writes, is “not for raising, but creating” the funds. The proposal is quite unique and simple – Every vendor who sells armaments to India has to compulsorily invest 30 percent of the contract value in domestic industries.
“So if Bofors or Agusta Westland sell Rs 10,000 crore worth of guns or choppers to India, they have to commit to invest Rs 3,000 crore in domestic industries. That’s called an offset obligation.”
Since India is a huge buyer of foreign arsenal, an estimated Rs 30,000 crore could flow into VCFs over the next 5 years, even if only 25 percent of the total offset obligation is infused, according to the government.
While that might sound like good news, here’s the catch: Given the government’s past record, will it impose a complex web of conditions on it, ruining it entirely?
Never put it past our babus to come up with a good idea, but disfigure it violently in the fine print with ridiculous, asphyxiating conditions, simply killing the original one.
Read the full article on BloombergQuint.