Guidelines for foreign investment in commodity exchanges
Ministry of Commerce & Industry, Government of India, had notified guidelines vide Press Note 2 (2008) dated March 12, 2008 wherein a composite ceiling of 49% was allowed in Commodity Exchanges with prior Government approval. The maximum ceiling of 49% is subject to the condition that investment under the Portfolio Investment Scheme will be limited to 23% and that under the FDI Scheme will be limited to 26%. Further no foreign investor/entity including persons acting in concert will hold more than 5% of the equity in these companies.
However, it has come to the notice of the Ministry that some of the existing exchanges have foreign investment more than the permissible level. To facilitate these entities to comply with the current foreign investment ceiling, they would be required to divest the foreign equity in excess of the maximum ceiling of 49% before June 30, 2009. All Commodity Exchanges are further directed to furnish compliance report informing the foreign investment in those entities as on June 30, 2009 along with details of equity structure to the DIPP, Department of Consumer Affairs, FIPB, Forward Markets Commission and SEBI. Non compliance of Press Note 2 (2008) after June 30, 2009 would be considered as a violation of FEMA, 1999.
PRESS NOTE NO. 8 (2008) [DIPP F. No. 12(58)/2005-FC Dated: August 19, 2008