In contrast to the growth on IT and ITeS front, disbursements of venture capital and public equity funding halved to $540 million during 2003 in India, a sharp fall compared to $1.1 billion in 2002, according to National Association of Software and Service Companies.
"The Indian venture capital and public equity sector faced a challenge of external environment in 2002," it said.
However, contrary to popular belief, the total quantum disbursed in India is at $530 mn, a sharp decline compared to the disbursement of $1.1 billion in 2002, Nasscom's Strategic Review 2004 said.
VC/PE disbursements in India have been insignificant over a period of time.
From 1995-2003, Indian VC/PE firms have invested around $3.3 billion, which is barely three per cent of the total invested in Asia. China and Hong Kong accounted for nearly 40 per cent of all Asian investments, Nasscom said.
There are 85 firms in India though the top 10 firms account for nearly two-thirds of the total investments made.
The share of India in total firms is about 12 per cent. However, the amount invested is low, suggesting the industry is extremely fragmented, it said.
"This is a crucial indicator, for a small firm size translates into a small fund size. A small fund earns less asset management fees thus restricting its ability to 'sniff' for new ideas and its ability to take risks", the review said.
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