Business Standard quotes Finance Minister P. Chidambaram as saying, “The operators have expressed difficulties in complying with some of the conditions. The government will also take into consideration the security requirements. Whatever is necessary and imperative will be kept.” You think they’ll come to an agreement sometime this decade?

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This is definitely not what a liberalizing India needs–especially the telecom sector, which is a poster child for liberalization.

Which government agencies are stalling this once-approved proposal? Well, without inundating you with a list of the various agencies (with long names) involved, let’s just say the Prime Minister’s Office and the Ministry of Defense have been the biggest spanner bungers. They say that among other things, there are security issues with increasing foreign direct investment in the sensitive telecom sector and that they are concerned non-Indians might hold top posts in these telecom companies. They are even considering disallowing Indian telecom firms from monitoring their networks from abroad.

Nasscom, the organization that represents the Indian software industry, has said these restrictions could cripple not just India’s Business Process Outsourcing, software and IT-enabled Services industries, but also India’s telecom companies. “We are definitely concerned about limiting remote access,” Kiran Karnik, president of Nasscom told gigaom. “It (limiting access) is not a good idea because BPOs use a lot of international network providers that monitor the BPOs’ networks from three or four centers around the world.”

Karnik added that if remote access is removed, it will hurt the Indian companies’ ability to minimize downtime and ensure failsafe networks. Also, as some of India’s telecom companies are becoming global players (Reliance and Bharti Airtel) they will need to set up remote access to manage their members abroad. “If this becomes a reciprocal thing it will hit them as well.”

The Prime Minister’s Office said it would come up with an ‘umbrella law’ to deal with security issues across industries, but it hasn’t been able to do that for months on end.

We aren’t debating the merits or demerits of increasing FDI or allowing non-Indians to hold top posts. And being concerned about security is more than reasonable. What we’re saying is that this flip flop, this schizophrenia on the part of the government, just sends thoroughly confusing signals to any potential investors. Why didn’t the government sort out these issues before it approved a hike in FDI? “It suggests that the government is not serious,” says Vikas Aggarwal, general manager at the infrastructure division of ICRA, an associate of Moody’s Investor Service.
In fact there are reports that the (GSM) Cellular Operators Association of India says that in case a consensus was not reached, “a suspension or revocation of Press Note 5 may be the best option.” Yeah, anything is better than a litany of, “Yes, you can” and “No, you can’t.” As Sridhar Pai of Tonse Telecom says, “You don’t take two steps forward and one step back, you have to present a more consistent image.”

The telecom sector is one of the rising stars on India’s firmament. Its growth has been explosive and is only increasing. “To fund that growth you need not just debt but also equity and that’s where the increase to 74 percent would be a great benefit,” says ICRA’s Aggarwal. Yet, he doesn’t believe potential investors will walk out of the country if the FDI hike is reversed. “It is too great a growth story. People still going to invest because the type of returns they will get are tremendous.”

Let’s just hope he’s right.

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That leaves the private guys two options: invest huge amounts of money to build their own last mile networks, like Bharti Airtel is doing, or cut a deal with the Mom & Pop local cable operators to provide last mile connectivity. Private operators providing broadband over coax, like Sify and Hathway, have been able to build their broadband customer base faster tapping the local cablewallahs, as they focus on Internet Protocol and because they are not telecom operators whose primary business is voice. But this model may not be sustainable.

We in Delhi had a pretty bad experience with Sify—likely showing the downside of partnering up with the local cable guy–and we weren’t alone. We got a Sify connection because Bharti’s operator-built network hadn’t reached us yet, proving the point that tapping cable operators may speed rollout. But for the nine months that we were Sify customers, our daily morning routine included (usually me) calling up ‘Sify Suresh’ (as he was listed in our mobile phone’ address book) at 9:00 am to tell him that the Internet was down again.

Competitors’ vandals (or birds?) would cut Sify’s lines, strung as they precariously were over tree-tops and across residential roofs. Worse, we were inundated with viruses over their open network. ‘Sify Suresh’ became such a fixture in our house and in our lives that we soon began to interact like close pals. Once when I called him, he said, “Remember that tree near which you met me the other day and I was up on that tree repairing the wires? I just passed that tree so I’m just five minutes away.” Yup, I knew which tree he was talking about and that exchange conducted in Hindi, was ten times funnier than this translation sounds.

Now, we use Bharti Airtel’s broadband service which has finally made its way to out neighborhood. We and others had some exciting interactions with Bharti as well, showing that their rollout of Broadband, as the Business Line article points out, hasn’t been smooth. Their sales representatives, eager to close a deal, would insist they provided service in our neighborhood. On two separate occasions, we forked over the 500 bucks (Rupees)advance to sign up only to hear from the guys who actually came to install said connection that Airtel didn’t have any pillars in this neighborhood. Trying to get back that 500 bucks was worse than having a root canal.

Later, lured by a new, one-time scheme offering unlimited broadband, we again called Bharti Airtel. The sales rep duly showed up assuring us that they ‘now’ have pillars here and asks for 500 bucks. I kept saying I’m not going to give that to you until we are actually connected. He said it was policy. I told him he could leave. He looked at me like I was completely mad and looked toward my husband for corroboration of my insanity. Turns out this time Airtel had expanded to our neighborhood (and some others) and we have unlimited 256 kbps “broadband” connection, that has for the most part been reliable.

But sometimes we do miss ‘Sify Suresh’ J

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Optimists say India can leapfrog slower-bandwidth tech with a speedy launch of 3G. But there are some questions whether India is really jumping ahead of the curve or blindly following in the footsteps of operators in more developed markets—where 3G’s fancy gizmos proved hard to sell to consumers. We know, high-end data and video downloads and Bollywood movies on your mobile, yada, yada, yada. But here’s a frank assessment: “3G as a revenue booster [in India] is far-fetched at this time,” Shubham Majumder of Macquarie Research told GigaOM.

On the upside, freeing up the 3G band may alleviate a spectrum shortage that makes a mobile call in a place like Bangalore a crapshoot on a good day—plagued by dropped calls and that infuriating “network busy” signal. But don’t get too excited yet. “A sudden, massive overnight migration to 3G may be unrealistic to expect,” Tonse Telecom’s Sridhar Pai told GigaOM. “It will also come with a fee, and some won’t adopt it immediately. In the intermediate time, it may make things worse.”

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Sunny started podcasting at Yahoo! India and in his usual articulate and engaging way he talked about the experience, at Blogcamp. (His podcasts are here.) Even though he is successful television commentator, often doing live broadcasts, he articulated the challenges of podcasting.

Television commentators get a lot of help from producers in preparing what to say, he said. For instance a producer alerts a commentator that they are soon going to run a visual of, say, Glenn McGrath running up to bowl, and so the commentator knows that he/she has to say something about the fearsome paceman’s run-up. “But in podcasting, things are different. I don’t have anyone or any events to feed off of,”,” Sunny said to a rapt audience, most if not all cricket fans.

Sunny added that he also found it tough compressing almost six hours of cricket into a six-minute summary. “The disadvantage is …I might miss out the cameos. I’ll list the double hundreds but I’ll miss the bowler taking one crucial wicket.” He said that in podcasting, it might be a good idea to have someone who can come back to him and say, “Sunil – what do you think of that?”

That said, the easiest thing he found is that he could finish off a podcast and not worry about the consequences. “In television sometimes viewers come back to you in some way or the other.” So what next?

He hinted at starting a blog, and it could be a good enough. Especially if he writes things like, “I find the game boring.” We are sure he was kidding or maybe he just wants to get down and play the game or just that he has never been a good watcher of the game!

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Chennai, India: Atul Chitnis credits blogging for spurring Domino’s to open a branch near his house in Bangalore. He said his posts about Domino’s not delivering to his neighborhood, a fact commented upon and picked up other Bangalore bloggers, inspired the pizza chain to actually mail him and ask him where he lives. “A branch is soon opening up, well, not next to my house as I would like it to, but close enough for them to deliver.” Neha Viswanathan’s spleen on some of local ICICI Bank’s policies caused the hapless bank to write to her offering to help, she said.

Blogcamp, India’s largest unconference of bloggers—yes, almost 200 people from around India showed up –kicked off with such anecdotes this morning in south Chennai at Tidel Park. According to Blogstreet India, there are some India-based 4,500 blogs in India, with Chennai having the maximum of 368 blogs which tracks some 4,500 India-based blogs, says the country boasts around 80,000 active blogs in total, with Chennai having the maximum of 368 blogs. The stated purpose of Blogcamp is to provide a forum where bloggers “can share their stories and be inspired by innovative and successful blogging experiences.” There was a lot of such sharing on Day One but one got a sense that there was a lot of preaching to the converted.

‘Blogging as a Career,’ a session by Amit Agarwal was one that a lot of the bloggers were looking forward to. I overheard several dewy-eyed, young ‘uns going up to Agarwal saying they were really looking forward to hearing how he makes money as a professional blogger. The session proved to be a bit of a damp squib as Agarwal, a) didn’t volunteer the exact amount he makes, which is what people (unfairly?) really wanted to hear b) his tips were, well, a bit trite c) some participant started to dispute adsense numbers and Agarwal instead of dealing with it head on insisted, “we can talk about it offline,” whatever that means.

One rather tasteless (depending on your taste) shill came from either an organizer or someone with Yahoo India. “If you haven’t tried the beta upgrade of Yahoo mail, you must try it now!…Ever wished you could backup an SMS from a special person? With Yahoo’s new beta you can!” Methinks the hard-sell didn’t work. Syed Nazir Razik, sitting in the audience and unable to resist, added, “It’s similar to Outlook and takes a long time to load even if you have a broadband connection.” Nokia, also a sponsor, had a stall to enlighten people about its Nseries phone, useful for mobile blogging. Thankfully they kept it on the down low. Also, an Intel India representative was there scouting for bloggers for this! (Call her!)

On Day Two participants have a video cast by Robert Scoble to look forward to. I, though, can’t wait to see and hear cricketing legend Sunil Gavaskar, in the flesh, talking about podcasting. And if Yahoo India’s shills are what it takes to get to hear the original ‘Little Master,’ all is forgiven Yahoo I!

Notes from the sidelines:

Nevertheless the participants were rewarded for their efforts (okay, they will say attending was reward enough) with, among other small thingamajigs, a pretty decent backpack with sponsor Yahoo India‘s logo and a very, very large T-Shirt (judging by the one I got) that said on the back, “I am blogging this.” And some of them were, thanks to Sify providing WiFi and the organizers Kiruba Shankar et al ensuring plug points for everyone to connect their laptops to—a rarity in electricity-starved India’s buildings. Getting into the first world groove, the first thing most did on entering the large auditorium was to whip out their laptops and check their mail. Most continued to surf through the day ;-).

* * * * *

Geek sessions (‘Introduction to Word Press,’ ‘Word press Hacks,’ etc) were held in a conference room above the auditorium where the non-geeks interested in discussing things like, “Disaster Blogging’ and “Group Blogging Strategies,’ hung out. It was all nice and friendly on the face of it but there was a definite competitive undercurrent, and I’m sure Veer Chand Bothra‘s announcement of the launch of blogstreetindia 2.0 didn’t help any. “Many people have complained about our rankings and with this new version we hope to improve,” he said. (Witnessed a lot of rolling of eyes at that statement.) Hopefully thing will improve for the ranking service in the near future.

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With even venture capitalists looking to invest as much as $1 million-$3 million, Indian entrepreneurs badly needed angel investors willing to commit smaller amounts in, and more importantly, provide guidance to, very early stage, pre-revenue companies.

To shore up the gap, together with Saurabh Srivastava and some other people, Mittal informally started Band of Angels, India, modeled on Band of Angels and Angel Capital Association, to provide not just money but also high-quality mentoring to budding entrepreneurs. The group that formally launched this April has 30 investors from a variety of industries and has made three investments.

The only one Mittal will name is Knowcross which makes software for the hospitality industry. The others, he says, are a technology retail chain and a heritage restaurant property that plans to scale up to a chain of high-end restaurants.

GigaOM recently chatted with Alok Mittal, who is also executive director at venture firm Canaan Partners’ India office, about the kinds of companies and the sectors Band of Angels is looking to invest in. Here are some excerpts of that conversation.

– On the minimum investment required by a Band member:

Alok Mittal: There is no real minimum. We are setting an expectation that members will invest about $50,000 a year. Every member doesn’t have to invest in every company. Also, simply some one with $50,000 to spare is not the kind of member we are looking for. We are passionate about entrepreneurship and we want to help build companies as well so we want members with experience and a proven track record.

–On the sectors Band of Angels, India, is looking to invest in:
AM: When we started out, the first set of members was strong in technology. Now only half of the 30 odd members are from the technology space. We always had a broad charter and want to support different kinds of businesses, because ultimately all of us are excited about entrepreneurship. We are looking at the Internet space, telecom technology and embedded domains, media and entertainment, BPO, retail and biotechnology, among others.

–On some proposals they are currently looking at:
AM: We are considering some projects on the Internet side, like e-learning and social networking. These startups need $100,000 to $300,000 and we are well designed to do these smaller investments. We are looking at telecom technology, like billing software, and also at smaller BPO plays but those that have demonstrated success.

–On the Band of Angels members being able to recoup their investments:
AM: This is a very new concept for India where even the venture capital industry is so nascent. Very few companies can really expand with $200,000 from an angel investor. So unless the next stage (venture capital) is available an angel can incur losses. Our success in a sense will depend on how the rest of the ecosystem is developing.

With VC investments increasing in India, this may just be the right time for angel investors, so anyone wanting to approach Band of Angels with an idea read this first and go, get funded.

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There is a sense of panic because fixed line connections are declining, and services like IPTV are being seen as potentially huge revenue generators. News articles — no doubt channeling executives from these companies — talk about several hundred Bollywood and Hollywood movies expected to be made available on-demand. Not so fast!

India has a measly 1.7 million broadband connections, just about half of what the government envisaged, because broadband prices are still too high. You can get what operators here call a broadband connection (128kpbs–snort!) for $5-$6 a month. Though cheap enough, that amount only covers data transfers of 200-250 megabytes, and you have to pay by the megabyte if you run over. Unlimited broadband at 256 kbps can run as high as $40 for home users and even higher for businesses.

For IPTV to really work, bandwidth prices have to come down so broadband can grow, says Jude Pinto, co-founder of research firm indiabandwidth.com. IPTV providers also have to contend with a highly fragmented cable television segment that has a much broader reach than its telecom firms — India has thousands of small cable operators, reaching more than 60 million households.

Then there is the issue of content. As indiabandwidth’s Pinto says, “If a BSNL deputy general manager is going to decide what IPTV will offer, you can just imagine.” (You can see what he means.) The bigger issue though is that the content industry is hugely fragmented. And forget the hundreds of Bollywood movies that IPTV players are talking about.

Even big Bollywood players don’t quite get things like making movies available on new platforms, licensing issues, etc. “I’ve met people in Bollywood who say, ‘Do what you want but I need four crores (about $1 million) in cash, now,’ ” says Sridhar Pai, an analyst at Tonse Telecom. No surprise there. These are the guys who used to, or still do, stash money in false ceilings and mattresses.

Reliance, for one, has already started buying content developers. Pai is quite bullish about Reliance’s IPTV prospects. “They are very conscious about price points and they have been working quite hard at it (with Microsoft and Cisco),” he says, adding that with the company’s push into retailing, the opportunities IPTV could offer — like grocery shopping using your IPTV remote — are limitless.

And yes, if this does work, it’s all about being able to get your preferred content when you want it. That could be really attractive to the urban, traveling set. Three-day weekend coming up? You can get all the episodes of the soap Kyunki Saas Bhi Kabhi Bahu Thi (Because a Mother-in-law was also once a Daughter-in-law) for a marathon viewing session. Imagine the joys — and the agony.

Just like waiting for IPTV in India.

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The recent surge in the growth of Internet connections might back that claim. New numbers from technology research firm comScore Networks that suggest India has 18.02 million Internet users over the age of 15. This makes India the ninth biggest country (up from the tenth in March) in terms of the total online population over the age of 15. India’s Internet users increased 7.8 percent since March and this is higher than the world online population growth of 2.7 per cent for the same period.

Another outfit, the Internet and Mobile Association (IAMAI) of India, is even bolder. They say the country has as many as 38.5 million users over the age of 12. “Our figure does include cyber cafes (in addition to homes and offices),” Subho Ray, president of IAMAI told GigaOM.

But even with those fat totals, the fact remains most of India’s billion people are denied access to the Internet–and not only because they don’t have a connection or a computer. The digital revolution is leaving them behind because they don’t speak English, the dominant language of the Web.

One expert says that the dearth of content in other Indian languages could limit the growth of the number of Internet users in the country. “Growth is almost saturating among English speaking users in India,” Deepak Maheshwari, secretary of the Internet Service Providers Association of India (ISPAI) told gigaom. “It (growth) is a difficult issue to address within the limited domain of English language content,” he said, adding that he is basing his conclusions on estimates that between five and 10 percent of India’s population speaks English. (Estimates of the number of English speakers in India vary widely from 5 percent of the population, or 50 million people, all the way to more than 30 percent, or 350 million people.)

IAMAI’s Ray is more upbeat. “The English speaking population is certainly many times more than 40 million in India and it is in fact growing with an increasing emphasis on English language training in our country,” he says. Moreover, it doesn’t take an MA in literature to navigate the web. Activities like sending an email, uploading a resume, looking for property and booking a ticket among other things can be undertaken without any deep knowledge of English, according to Ray. “Most Indians in urban areas can understand simple instructions such as, “submit” ‘send” etc in English,” he says.

Even if there is room for further growth among English-language users in India, far greater growth could be unleashed. Hindi is the world’s third or fourth most widely spoken language. Yet it is not even in the top 10 languages on the Internet, according to InternetWorldStats.com. A recent survey by New Delhi-based online research consultant JuxtConsult showed that 44 percent of the 30,000 odd people it polled preferred sites in Hindi and 25 percent wanted content in other local Indian languages.

Maheshwari believes that not only does there need to be content in local languages, that content must also have local context. “It isn’t enough that a Web site shows me the weather forecast for New York in Hindi. That is not relevant to me if I’m sitting in Kanpur,” he says, adding, that there is a “need to proliferate hosting in the country.” His rationale is that the time lag in accessing something that is on a server in the US is actually a deterrent to a new user who is still trying to figure out how to use the Internet. The challenges in increasing local content, he says, include the standardization of fonts and internationalized domain names, an issue the Indian government is already working on.

In some ways, the Internet content space is like the Indian cable television space of 15 years ago. India started with Star TV’s Star Plus, a channel that showed tripe like “The Bold and The Beautiful.” Now, another channel, Star World, still shows Indians cheesy stuff like Baywatch and the A Team (B&B is still going strong). But Star Plus, the former home of B&B, has shifted to all Hindi content, and most of its programs draw more viewers than B&B or any other U.S. television show. “Once the market push is there, it is not difficult for online businesses to provide services in local languages,” says Ray, adding that having local language software is a more difficult issue to solve.

Some small steps are being taken to increase local language content but it is too early to say whether they have in any way spurred Internet usage. Raftaar, a Hindi language search engine developed by Delhi-based research firm Indicus Analytics, debuted earlier this year, but there needs to be more content in Hindi for it to be of any use.

Local language newspapers have gone online, webduniya.com offers content in Hindi, Tamil, Telugu and Malayalam and a government-led project Vidyavahini, which aims to use the Internet to train teachers and provide educational materials on the Internet, plans to develop content in Hindi, Tamil, Malayalam and Bengali, in addition to English. Also check out Alootechie’s interview with the founders of a Bhojpuri language site!

Photo via Flickr by gdStone.

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Sunaina Bansal hopes to emulate the success of Briton Alex Tew’s Million Dollar Home Page from which Tew reportedly earned a million dollars. ‘Crorepati’ is a Hindi word that means ‘One who owns a crore of Rupees.’ A crore is equal to 10 million, so a crore of rupees would be about $227,272. The better-known advertisers on Bansal’s page are matrimonial site Shaadi.com, engineering conglomerate Kirloskar and rediff.com.

Bansal started the page offering one million pixels — that will remain active for a minimum of five years –for 10 rupees each, which is 23 cents. Advertisers can buy these pixels in 100 pixel-squares measuring 10 by 10 pixels and the page has been designed to have 10,000 of 100 pixel squares. A click on each advertisement or slogan links visitors to the advertiser’s Web page.

“If a housewife like me can harness the power of the Internet to make a revolution, I am confident that Indian women of today can get increasingly familiar with this new medium and join in boosting the Indian Internet community,” Bansal says, adding that she would like to influence Indian women, “to gear up and join in the Internet revolution in India.”

Does this kind of gimmick work? It seems like most advertisers on Tew’s site did it because they knew it would attract a lot of publicity. So the dozens of copycat sites spawned by Tew’s success would not have done as well as they couldn’t beat having Tew’s first-mover advantage.

Update: Due to my mistake, we used the million dollar page, instead of a million rupee page in the headline – Om

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A Reuters story, ‘Indian village uploads itself onto Internet,’ was picked up by a lot of newspapers around the world this past weekend. By ‘uploads,’ all that was meant was that Hansdehar: Pop. 1753, the north Indian village in question, got itself a Web site.

Big Deal.

The village doesn’t have a single Internet connection, though the article says one is “imminent.” It only has two computers, on one of which someone is learning to type. It has just two high schools, which, going by the pictures on the ‘uploaded’ village, look pretty woeful. Worse, it doesn’t have a medical clinic. (The village web site says there is one primary health center that is three kilometers outside the village.)

Yet the villagers have been given to think that having a web site will somehow revolutionize their lives. “Now we can put our problems on the Web site, and then the government can’t say ‘we didn’t know’,” one villager is quoted as saying. Hate to dash his hopes to the ground (or to upload them) but methinks the government already knows. Does it care? We don’t know.

The article says the younger denizens of the village plan to use the Internet –whenever they get a connection, no, make that if they ever get a connection — to help hasten their exit by searching online for college places and jobs in big cities. Not to be a total cynic, but most online content is in English, which they most likely don’t understand well enough to access. And most of the jobs advertised online require qualifications beyond the purview of the village school system. And before I get brickbats about my comments on English and jobs, see this. I don’t believe it is right but there it is.

One gets fairly fed-up reading articles that tout such trivial things like getting a Web site as this great signpost of development or that (falsely) show technology as being the great equalizer and an end in itself. And at the risk of being considered partisan — towards the Indian bureaucracy, Bill Gates and Intel all rolled into one — I hold even Nicholas Negroponte’s “One Laptop per Child” (OLPC) initiative guilty of overemphasizing technology as an end in itself. What is a kid who goes to a school with rampant teacher absenteeism, no infrastructure to speak of –like desks, fans or electricity to run those fans –going to do with a laptop?

There are ways that telecom and the Internet can be used to help rural India, but the key is identifying the relevant content and services that the villagers need and coming up with a plan to deliver them through the web. One promising project is Ashok Jhunjhunwala’s Telecommunications and Networking Group (Tenet), run under the aegis of the Indian Institute of Technology in Madras.

Among other things, check out Tenet’s Gramateller, an ATM that delivers low cost banking services to rural areas, or its Remote Diagnostic Kit that can be installed at villages and other remote locations that have Internet connectivity (which Tenet companies also enable); its online tutorials that seek to enable rural students to pass examinations and its Indic Computing that tries to ensure that people who don’t speak English aren’t left out of access to information on the Internet.

Hansdehar’s Web site has a picture of the village Panchayat, the local self-government body, “assembled at Guru Dwara discussing
issue of misplacement of a Bull.” The Reuters article says they never found the bull. If anyone has seen it, please email Hansdehar village here. Oh, wait, they don’t have Internet access yet.

Sometimes a Web site is just a Web site.

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She did stints for Fox News and Dow Jones. She will write mostly about start-ups, venture capital, telecom and technology scene in India and other parts of South Asia. She is a fantastic writer, and you will find that outHer coverage will dovetails with my belief that broadband has freed innovation from geographic limitations. Hopefully we can add more voices from our broadband planet. Stay tuned, and if you get a chance, say hello. Meanwhile, here is a great overview of the Indian VC market. – Om!

With a booming mobile phone user base, a steady rise in the number of Internet users, high capital efficiency and a big opportunity for exits, India is seeing the return of venture capital –in the real sense of the word — through funds and via cross-border investments.
After a lull between 2000 and 2004, the prospects for Indian start-ups are looking good again. Last year, India saw venture capital investments worth $482 million across 52 deals, and this year until June, there have already been investments worth $240 million across as many as 49 deals, according to Venture Intelligence, a research service focused on private equity and venture capital activity in India. (These numbers do not include private equity deals.)

VC firms are realizing they need to invest in companies that are low on investment and high on capital efficiency. “Both those parameters work in India where even $10 million goes a long way. So they are thinking, ‘Why not just invest directly in India?’ “says Arun Natarajan, founder and chief executive of Venture Intelligence.

And unlike in the late 1990s when venture capital bets in India were all over the place, this time around, many bets are in niche emerging sectors — consumer Internet companies like classified advertisements, and online travel, mobile and mobile value-added services companies, online and mobile gaming companies and telecom (including wireless) technology solutions companies.

There are other reasons as well. Asian Private Equity News recently notes that India has raised four times as many funds as China. In a newsletter they recently wrote:

In China, which is preparing to enact stricter regulations for private equity and venture capital activity, the government is in the early stages of completely re-organizing its approach and control over foreign private equity investments in this country. ….. In India, on the other hand, the government has put out the “open for business” sign in large print as the government voted to approve KKR’s half-billion dollar acquisition of Flextronics’ software development arm in India.

According to Venture Intelligence, for the first six months of this year, 23 percent, that is nearly $55 million of venture capital was invested in online and mobile services companies, $44 million was invested in Internet-based services companies and $10 million was in mobile value-added services companies.

Sequoia Capital has started its India Growth Fund I for which it has raised $383 million. It plans to invest in the consumer services segment, which includes the Internet and mobile value-added services. Sequoia recently merged with India’s WestBridge Capital Partners. Matrix Partners’ new $150 million India fund plans to invest in the mobile technology and Internet space, among others. Helion Venture Partners has started a $140 million India fund to invest in, among other things, online gaming and ticket booking, IP-based products and mobile and Internet services. New Enterprise Associates has started NEA IndoUS Ventures, reportedly a $105 million venture fund, with Vinod Dham (yes, that one) as a partner.

“The mobile is India’s PC,” as Ram Shriram of Sherpalo Ventures has said at several forums. There are currently a little over 100 million mobile subscribers in India and that number is expected to rise to a whopping 348 million by the end of 2010. “The local market is world scale, so a company based in India and targeting the Indian market is beginning to be viewed as a great opportunity. Venture capitalists are now seeing India not just as a place to outsource to,” says Natarajan.

To wit, Sherpalo Ventures and Kleiner Perkins Caufield & Byers have invested $5 million in Paymate, a wireless technology solutions provider in mobile commerce. Sequoia India and Intel Capital have invested in Mauj Telecom, and Pequot Ventures has pumped in $10 million into IMImobile, an enabler of mobile content services. Helion Venture Partners has made its first investment of $2.2 million in JiGrahak Mobility Solutions, that allows users to make payments and buy things using their mobile phones.

But the Indian mobile market is seeing stagnating if not declining ARPU, so it remains to be seen if the country’s mobile subscribers will take to value added services in a big way. In addition, currently, revenue sharing is so skewed in favor of mobile operators that it is hard to figure how value added services companies will make money. That scenario could change with wireless technology that enables these service providers to bypass operators.

The consumer Internet space seems a surer bet at this point. VC firms are looking for where the Internet has had disruptive effects (in the US) and that has happened in travel, and classified advertisements. “So they bet it will happen in India and China too. It’s just a matter of time,” says Natarajan, adding, “They went to China first and had some successes and now they are coming to India.” So, study what’s in the U.S., take it to China and then to India!

And that’s where consumer Internet companies come in. India has far fewer Internet users –35 million — than mobile subscribers, but the former are growing at 50 percent a year. Combine that statistic with the fact there is a tourism boom, a real estate boom and a jobs boom and what you have is a huge opportunity in online consumer companies.

Recent investments in Indian online travel companies include Softbank Asia Infrastructure Fund’s $10 million in Makemytrip.com, Sequoia India’s $10 million in Travelguru, and Norwest Venture Partners, Reliance Capital and Television 18′s $5 million in Yatra Online. Kleiner Perkins and Sherpalo ventures have invested around $4 million in InfoEgde, a company that owns jobs portal Naukri.com (jobs portal) and property portal 99acres.com. In June, BillDesk, an Indian online payments company, received $7.5 million from Clearstone Venture Partners and India’s largest public sector bank, State Bank of India.

Oh and let’s not forget that many Indians still prefer to get married the traditional arranged way so matrimonial sites with advertisements for prospective brides and grooms are also big money spinners. Sequoia India has invested $8 million in matrimonial site shaadi.com and Canaan Partners and Yahoo followed with an investment of $8.6 million in the Bharat Matrimony Group that also owns clickjobs.com, indiaautomobile.com and indiaproperty.com.

All these companies should thank, in part, India’s best-known success story- outsourcing. With so many companies outsourcing back-office functions to India, many potential investors have already tested the waters and think highly of India’s technology development skills and cost efficiency. “So much so that Sequoia is blunt about it. They say that if any company they are thinking of investing in (in the U.S.) does not have more India then China, and an R &D center in India, they don’t invest,” says Natarajan.

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NG Pay, the Bangalore-based startup’s product, is a downloadable mobile application that allows users to make payments and buy things using their mobile phones. “Ji Grahak” is Hindi for “Yes, customer.” Helion Venture’s partners Ashish Gupta and Kanwaljit Singh will join the JiGrahak board.

India’s mobile value added services space is getting more and more attention from venture capital as the number of mobile subscribers in India is rising rapidly. The country has 111.23 million mobile subscribers as of the end of July, according to figures released today by the Telecom Regulatory Authority of India. (PDF release.)

Last month, Kleiner Perkins, Caulfield & Byers and Sherpalo Ventures invested around $5 million in PayMate, a mobile payment company. In February Sequoia Capital India and Intel Capital invested $10 million in Mauj Telecom, which provides mobile value-added services like games and ring tones.

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Currently, dial-up connectivity via Druknet, Bhutan Telecom’s Internet service provider, is between 14.4 kbps to 52.2 kbps. This is expected to increase to 512 kbps or higher once the network is completed. Druknet has about 5,000 dial-up users and while the number of users has remained about the same over the years, usage had gone up. The pricing plans have not been worked out, but the DSL based service could in the future also support triple pay services – video, voice and data.

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Google currently operates a development center in Bangalore. Google’s India office was responsible for coming up with Google Finance. About half a dozen technology companies have announced plans to invest a billion dollars or more in India

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The Indian Institute of Information Technology in the southern Indian city has been studying the project for the last six months and has short-listed five companies for the project. The service is supposed to be within two years, though no one is offering any details on how it will get done. Karnataka state, of which Bangalore is the capital, would not be bearing any of the cost of the project, a state government official said.

“The companies will have their own revenue model. It (the venture) will be something which will be platform neutral,” Anup K Pujari, Karnataka’s principal secretary, information technology told Indiatimes.com. He said the idea is to provide broadband Internet access for a customer on the move, irrespective of the telecom service provider the customer uses, with the service provider charging for interconnection. “(The) Expectation is that consumer will pay less than what he is paying today (for wired internet broadband access),” Mr. Pujari said.

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