The comparisons with China are far too painful, he points out. "In spite ofbeing a communist country, their economy is far more open than India's," headded. "While we are still trying to provide landlines, China has more cellphones in Xinhuan province that in all of India put together," he says.

Then there is the Internet. Till a couple of years ago, India had aheadstart over China on the Internet backbone. The Ernet, a UNDP funded 2mbps pipeline, had wired most universities and research outfits. Given thatkind of a base, most India-watchers reckoned, the lead would be maintained.The way things are now, Ernet finds itself reduced to the periphery. Even asbureaucracy wrangles over what next, the Ernet lines are clogged andInternet for researchers remains a pipe dream.

Till recently, only the government owned-VSNL had a mandate to sellbandwidth and private competition was anathema. Access prices still remainway too high and beyond the reach of most middle-class households.

China has surged ahead. Its bandwidth requirements are met by fourstate-owned access providers. The quantum of users is a couple of millionmore than that in India.

Which is why, in spite of the fact that the Internet is heavily regulated inChina, private entrepreneurship has been straining at the leash. China.comis a case in point which met with an overwhelming response on the US stockmarkets.

Cut back to India and Pathak finds more room to complain. Indian venturecapital funds, for instance, he says offload their stakes on Nasdaq. "Thisis absurd and has to change," he says.

Point being, he adds, the Indian markets are not mature enough to offer thekind of valuations Internet companies deserve. Given existing realities,true valuations, he says, can be achieved only on foreign bourses.

In spite of all these hurdles, Warburg Pincus has a $200 million exposure inIndia. These numbers put India as the number one investment destination forthe company, far ahead of China. With interests in IT and biotechnology,Pathak said they have invested in Rediff, UTV, Bharti Telecom, NicholasPiramal, Marico and HDFC. Of the $200 million, the largest quantum of fundsat $65 million have found its way to Bharti Telecom.

He indicated that Warburg Pincus is picking up stakes in two more Indian ITcompanies over the next couple of days. "The deal is almost through, but wecannot talk about it right now," he said.

Pathak said that VCs are actively wooing IT companies primarily because "youcannot make money anymore in capital intensive businesses." But there areexceptions, he added. "We recently put our money into the US-based BethlehemSteel."