Investing in Indian cos have never been this easy for PE investors

The central government is going to make some of the rules easy for foreign fund managers to allow private equity investors to make more investments in India.

The government would exempt such investors from paying tax on capital gains by relaxing safe harbour rules and is expected to relax the arm's-length condition that allows only third party fund managers to rekindle investor interest in the scheme.

Not a single fund manager has shown interest even after eight months of announcing the safe harbour rules by Finance Minister Arun Jaitley during his budget speech in February.

As per official norms, the government had released 15 conditions that the fund managers had to follow if they wish to shift their base to India.

After the fund managers and their tax consultants said that some of conditions were restraining, the government has planned to relax some of these clauses, that includes allowing a "look through" or a "see through" for investors.

Due to change in clauses, an investor should not own more than 10% in the fund. This disqualifies several funds that qualify as broad-based funds but where the immediate member is a single institutional fund such as pension fund, university or mutual fund.

Moreover investors across the world combine forces to form a special purpose vehicle (SPV) or an investment arm that invests in fund.

(Image: Indiatimes)