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Govt Plans To Float $2 Bn Alternative Investment Fund For Startups

Saransh Pandey

Intern
  • September 30, 2020
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    According to reports, an expert committee has submitted its report to the IRDAI regarding the creation of the AIF.

The government is currently engaged in talks with a global pension fund and the Insurance Regulatory Development Authority of India (IRDAI), to provide the much-needed growth for startups by floating a $2 Bn alternative investment fund (AIF). The move is aimed at reducing the dependence of startups on foreign private equity players by providing more domestic funding options for startups. 

As part of this, the government can also bring in several special changes to the existing laws which include insurance sector regulations. In the government’s efforts, Global pension funds and insurance companies will also take part as investors. 

According to reports, an expert committee has submitted its report to the IRDAI regarding the creation of the AIF which are funds that pool capital from institutional investors and wealthy individuals in order to make them invest in riskier assets. All AIF’s in India come under the Security and Exchange Board of India’s purview.   

Recently in order to end the reliance of startups on foreign investments for growth, the Parliamentary Standing Committee on Finance called for an expansion of the Small Industries Development Bank of India (SIDBI) Fund-of-Funds vehicle to enable it to function as an anchor investor.  

The panel’s recommendations come after the anti-China sentiment in India is at its peak, following geopolitical tension along the border. In order to promote Aatmanirbhar Bharat or Self-Reliant India pitch, the government has banned hundreds of Chinese mobile applications and told eCommerce platforms to list the country of origin for all products listed on their website, besides ramping up its. 

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