How private equity & venture capital investors affect the exit method in entrepreneurial ventures

Evolution of Private Equity Regulations in Emerging Markets: A Case of India

Post liberalization, especially in the last decade or so, the private equity (PE) industry has played a significant role in India’s growth story. Owing to its fast emergence, the PE industry went from having an ad-hoc regulation to a formal regulatory framework. This evolution presents a good case to study and understand financial policy making as it happens in India. We track the evolution of regulatory environment for the PE industry,from SEBI (Venture Capital Funds) Regulations 1996 to the SEBI (Alternative Investment Funds) (Amendment) Regulations 2013, which govern the industry today. This historical study provides significant insights into the way financial regulation works in India. While it shows that regulators in India are usually reactive rather than proactive, it also emphasizes the importance of effective regulation in boosting an important industry. It highlights the fact that a regulator should not create regulations in isolation; it is critical to take inputs from different stakeholders in order to develop effective regulations.