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`Knowledge initiative' for lower foreign equity cap

Our Bureau

NEW DELHI, Nov. 29

THE US Chairman of Indo-US Knowledge Trade Initiative (KTI), Mr Dean R. O'Hare, on Thursday said that removal or reduction by India of equity caps on foreign ownership of service companies, especially financial services, could unlock large investment flo ws and encourage development of soft infrastructure.

At the release function of the final report of KTI, Mr O' Hare, who is also CEO and Chairman of Chubb Corporation, said that India's educational system should be opened up to foreign investment and other kinds of joint ventures.

According to him, aggressive efforts need to be made to develop stronger institutional links between leading research institutions.

On financial sector reforms, he said that US venture capital companies could bring capital, experience, know-how, networks and education that could help spur the development of a domestic venture capital industry.

``But this will require more flexible exit options for investors, greater transparency in corporate governance, and prudent relaxation of norms barring pension funds from participation in venture capital funds," he added.

Mr Sunil Bharti Mittal, Indian Chairman of KTI, said that the crux of the KTI report lies in the form of recommendations for realising the benefits to both the countries and to the world of expanded trade in the whole range of knowledge-based industries.

``The reports make it evident that a lot needs to be done to meet the challenges of expanding the knowledge trade," he added.Mr Frank Wisner, Chairman, US-India Business Council, said that American business leaders are visiting India to explore the oppor tunities that are unfolding as a result of the rapid warming of Indo-US relations since the WTC attacks.

``One of the most important developments has been the opening of possibilities for co-operation in defence and security, including commercial military sales and joint ventures with Indian businesses in the newly opening Indian defence industry," Mr Wisne r said.

Later, speaking to newspersons at a conference on Post Doha US-India Synergy: Knowledge As a Driver, Mr O' Hare said, "Nobody in the Government or IRDA has given any specific timeframe by when the foreign equity cap in the insurance sector will be raised to, say, a level of 49 per cent."