New Delhi: Foreign institutional investors (FIIs) can now invest up to 23 percent in commodity exchanges without seeking prior approval of the government, as per the new FDI norms announced by the Industry Ministry on Tuesday.
"Such investment (up to 23 percent) by FIIs, in commodity exchanges, will, therefore, no longer require Government approval," said the Department of Industrial Policy and Promotion's (DIPP's) consolidated FDI policy, which comes into effect from Tuesday.
However, foreign direct investment (FDI) will continue to need the approval of the FIPB.
At present, foreign investment, within a composite (FDI and FII) cap of 49 percent, under the government approval route is permitted in commodity exchanges.
Within this overall limit of 49 percent, investment by registered FIIs is limited to 23 percent and investment under the FDI scheme is limited to 26 percent.
"It has now been decided to liberalise the policy and to mandate the requirement of government approval only for FDI component of the investment," DIPP said.
"This change aligns the policy for foreign investment in commodity exchanges, with that of other infrastructure companies in the securities markets, such as stock exchanges, depositories and clearing corporations," it added.
DIPP has also decided that the consolidated FDI circular will be announced every year instead of six-monthly basis. The next policy would be on March 29, 2013.