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Mercury News is running this special series on India’s rise as a technological powerhouse, with a lot of Silicon Valley entrepreneurs returning to India as Venture Capitalists. Some of the striking points from the article:

“It took the valley 30, 35 years to get where we are today”, observed Ash Lilani, head of Silicon Valley Bank Global, which has an office in Bangalore and assists VCs looking for overseas investments. “We are trying to replicate that in India in two years”.
-Not sure what is the magic formula here!

In India, VCs have made 53 early-stage investments in start-ups worth $355 million during the first nine months of 2006. That’s still nearly twice as much activity in that period than the two previous years combined, according to Venture Intelligence, a Chennai research service focused on private equity and venture capital activity in India.
-We are trying to find out how many of these are related to consumer Internet industry, will report back here when we get the details.

Evalueserve, a Saratoga-based market research firm, estimates that more than 40 India funds have been raised, or are being created, by U.S. VCs. Silicon Valley Bank, though, figures the number to be closer to 24, with about $1 billion flowing into start-ups during the next few years. Either way, investors are now sensing India’s economic ascension is arriving.
-You can read more details here.

The report also outlines some of the risks of a tech bubble. Some more points include the lack of labor laws, the fact that judicial system moves slowly and the fact that there is no concept of preferred stocks.
-We had covered some of the concerns here.

In the end, the article talks about some of the rural possibilities coming out of entrepreneurial activity. For e.g. a Hyderabad based CoOptions Technologies.

Also they have compiled a list of VC’s along with their portfolio companies in India and a good slide show here.