Given the backdrop of the US slowdown, VC interests are now clearly moving towards the emerging markets. India particularly in recent months has seen its VC fund flow increase seven times, driven by the IT sector -- which according to investors is expected to contribute to 20 per cent of the economy by 2008.

But the highlight quite simply was a reality check to gauge the scalability of the Indian IT boom. While it did throw up some amusing investor concerns including the long drawn immigration procedures or the glitches in travel arrangements while travelling to India -- the bottom line was that India could sustain the boom and replicate the ``Israel'' model provided the infrastructure and regulatory issues are sorted out.

Another interesting point was the emergence of Calcutta as a probable high-tech destination in a segment that has been dominated by cities like Bangalore, Hyderabad, Chennai and Delhi.

According to EM Warburg Pincus & Co (Asia) managing director Dalip Pathak, the boom in the IT segment was set to transform the country's economy. Warburg Pincus has been significantly active in new economy investments having committed close to $330 million in India investments.

Addressing the `Boom or Bubble?' session on the Indian IT industry, US-based global investment firm HarbourVest Partners senior managing director Edward W Kane felt that regulatory issues needed to be simplified in India and the high rate of capital gains taxation was a problem for the private equity sector. While the brain drain continued, the fact that the industry was focused on all software and no diversification within technology, the Indian IT industry could face certain implications, Mr Kane said.

However given that India had the world's second largest population of English speaking technicians and the attention of global VCs the industry was likely to see long term growth, he added.

In agreement to push for the simplification of regulatory and infrastructure bottle necks, BPL Innovision chairman -- Internet broadband technology solutions business -- and former VSNL chief BK Syngal said the IT boom was a `health' bubble and the telecom sector in particular had seen significant growth.

``Once the regulatory environment is simplified, technology should be focused to drive services for the customers. Infrastructuretherefore needs to support industry growth,'' Mr Syngal said.