Warren Buffet's investment partnerships cannot be born in India as LLP even now

Warren Buffet built his initial reputation and winnings through an investment partnership, where friends/relatives/acquaintances invested their capital in partnership with his acumen! It was a win-win for both parties in the end. However, in India, thanks to the legal and regulatory issues, this is next to impossible. Recently, a friend was thinking of setting up his own investment partnership in which he wanted auditable returns, favourable tax treatment, ease of entry/exit of investors, and least administrative cost. But after reading this excellent article http://capitalmind.in/2011/06/creating-a-hedge-fund-in-india/ I realized that that would be next to impossible. Since that article did not cover LLPs in depth, I decided to do so. This would cover questions like structuring investment partnership as LLP etc

1. What do I mean by investment partnership? As commonly understood, investment partnership happens where investor funds are pooled in a common strategy, without any investor specific customization within the fund. For example, 10 friends entrust Rs 5 lakhs each to their common friend Mr X to invest in special situations. This would be an investment partnership, as funds are pooled. 
2. Which regulations govern this? The securities regulator SEBI governs portfolio managers(discretionary and otherwise), mandating minimum investment limit(Rs 25 lakhs), restrictions on fee methodology(water mark etc). Even for those who feel they are not covered by that restriction due to 'not being companies etc', the SEBI Alternate Investment Regulations 2012 cover this  ―Alternative Investment Fund‖ means any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which,-(i) is a privately pooled investment vehicle which collects funds from investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors; and (ii) is not covered under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, Securities and  Exchange Board of India (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities: Since the partnership will be an investments company by its very nature(http://india-financing.com/Question_of_Definition-What_Exactly_is_an_NBFC.pdf), RBI regulations of registration etc will apply http://www.rbi.org.in/scripts/FAQView.aspx?Id=71
3.  RBI regulations apply to NBFCs(non banking financial COMPANIES) and not to firms, why should the LLP be subject to this? Section 14 of the LLP Act 2008 states that On registration, a limited liability partnership shall, by its name, be capable of.....(d)  doing and suffering such other acts and things as bodies corporate may lawfully do and suffer. Section 2(d) of the LLP Act2008 defines body corporate.... “body corporate” means a company as defined in section 3 of the Companies Act, 1956 (1 of 1956) and includes..Therefore, since LLP is a body corporate under the Act and subject to other acts applicable to body corporates, the RBI NBFC norms will apply to it to the same extent that they would apply to companies. 
4. Are any minimum qualifications needed? After reading the SEBI AIF Regulations at the link below, I realized that this would be a difficult http://www.sebi.gov.in/cms/sebi_data/attachdocs/1337601524196.pdf the key investment team of the Manager of Alternative Investment Fund has adequate experience, with at least one key personnel having not less than five years experience in advising or managing pools of capital or in fund or asset or wealth or portfolio management or in the business of buying, selling and dealing of securities or other financial assets and has relevant professional qualification; 
5.   The requirement of three regulators? Renowned lawyer Mr Sandeep Parekh opines that both RBI and SEBI will need to give approval, apart from the administrative approval from Companies/LLP regulator.  "It's a three-stage process for RBI-regulated entities like non-banking finance companies (NBFCs). The first step would be to incorporate; this is done by the Registrar of Companies. Second, they have to obtain a licence to operate as NBFC and for which it must apply to RBI; and thirdly, if an NBFC intends to provide investment advisory services it will likely need permission first from RBI and then from Sebi," said Sandeep Parekh, founder of Finsec Law Advisors. "This would obviate turf wars between financial regulators," he said. http://articles.economictimes.indiatimes.com/2012-10-02/news/34218105_1_sebi-board-capital-market-regulator-corporates In practice, some friends inform me that the LLP/companies registrars seek NOC from RBI even before first step! 

Conclusion:-Given the capital, annual fees and experience requirements, such a venture would be stillborn in India if intended to be run legally.