The announcement was made in the Capital, at the inauguration of the TiE 2000 conference, which was jointly organised by The Indus Entrepreneurs (TiE) and Nasscom. Mr Sinha said: "We have decided to do away with the stipulation and the choice of exit has been left entirely to the VCs.

However, the Government will be very watchful of any misuse of the relaxation. If any misuse is noticed, action will be taken."

Mr Sinha was responding to the industry's request to ease the restrictions. The Minister, however, declined to accept the other request of allowing the companies enjoying tax holidays to change the equity ownership beyond 51 per cent. Mr Sinha said: "This can wait. This is something we will look at, at the time when I present the budget next year." Meanwhile, Nasscom in consultation with the IT industry can prepare a wish-list to be discussed during the pre-budget discussion, he said, adding that he was not in favour of making modifications between budgets. Mr Sinha asked Indian industry to discard the mentality of seeking sops and concentrate on using information technology to increase productivity. "We should get out of the mentality of sops in the form of things like interest rates. If we increase our productivity this will not be necessary," he said.

Reacting to the announcement on giving relief to the exit stipulation of VC funds, Nasscom president, Mr Dewang Mehta said that the IT industry will get a great boost with the decision and it will help in attracting more and more funds for IT ventures. Nasscom has been lobbying that the decision of exit and entry should be left to VC funds or their individual agreements with entrepreneurs.

``In any case, VCs themselves would like to exit the venture after the company goes public,'' he added.

Mr Raj Popli of Accordiant Ventures, also welcomed the decision of relaxing VC exit norms. He said that the step will encourage the VCs to fund Indian ventures. He was of the view that VCs should be allowed to decide the time of their exit as per their own strategic compulsions.

Dr Suhas Patil, one of the founders of TiE, said that the decision to scrap the stipulation is a correct move and costs nothing. It will, in fact, bring greater tax benefit in the long run. Lauding the announcement, Mr Manish Modi, chief entrepreneur of NetAcross Ltd said that the decision will boost the growth of industry.