LIC, EPFO could start investing in Indian startups, do investors need to worry?

New Delhi: Your investments in the schemes offered by the Life Insurance Corporation of India (LIC) and the Employees' Provident Fund (EFPO) could be invested in India’s startups to offer you promised returns. Both the state-backed organisations are in talks with the Department of Promotion of Industry and Internal Trade (DPIIT) to invest in India’s startup ecosystem, which has grown manifold in the past few decades. 

If the government allows LIC and EPFO investments in Indian startups, then the country’s startups won’t have to depend on foreign fundings for their growth. At present, Indian startups usually raise most of the capital from several countries such as Singapore, Saudi Arabia, the US, and Canada, among other nations. 

Additional secretary of DPIIT, Anil Agarwal, said that the government is in the process of encouraging the two state-owned firms - LIC and EPFO - to start investing in India’s startups to get hefty returns from their funds, according to a report by ET. 

Agarwal reportedly cited examples of how state-backed funds like Canada’s Ontario Teachers’ Pension Plan Board earned a 9.5% annual return by investing in the country’s startup ecosystem for the past three years.  

“We don’t want India to become a digital colony. Out of the $70 Bn that came in the last six years, only 10% is Indian money. We want more Indian money to come in. And for that, the capital gains tax has to be reduced. It will move the market much faster,” Agarwal was quoted as saying. 

What does it mean for investors? 

Investors of the LIC of EPFO may need not worry, as both the funds offer assured returns. At present, fund managers of EPFO and LIC invest in Sensex and Nifty stocks, government bonds and other debt instruments to offer your assured returns. Also Read: BSNL Rs 1498 annual data prepaid plan launched: Get internet, unlimited Calls throughout the year

Investments in startups could be risky but the money put in debt and the stock market will ensure that you receive promised returns in case the LIC or EPFO starts placing their bets on Indian startups. Also Read: Honda CB200X ADV launched in India: Check price, specs and features in pics