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US bullish on India's IT industry, pours venture capital

Venture capital in Indian information technology industry is expected to rise from $150 million in new technology companies in 1998 to at least $1 billion this year, media reports in Washington said.

This year it would touch $1 billion, most of which are originating from the United States, Newsweek magazine reports, quoting Vishnu Varshney, chairman of the Indian Venture Capital Association.

By 2008, it is expected to jump to $10 billion, says McKinsey & Company. "If you want cheap labour, go to China. If it's cheap intellect you want, India is the place," an American venture capitalist Norman Prouty said.

As in the US, says Newsweek, India's IT industry is gradually becoming an engine of economic growth. The flow of new investment money leads to the creation of new companies, which in turn spins out jobs and wealth in a country in need of both.

"India is standing where the US was in the 1980s or Israel in the early 1990s," says eVenture's chief executive officer Neeraj Bhargava.

"Information technology is India's oil. You can smell the electricity in the air," he says.

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