New Delhi: Foreign institutional investors (FII) will no longer need any approvals from the Indian government for investment in commodity exchanges, the trade ministry said in a statement on Tuesday. The approval requirement will however stay for investments made through the foreign direct investment route, it said. Total foreign investment, including via FIIs and FDI, is capped at 49 percent in commodity exchanges.

"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 today.
    
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 per cent 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. 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," DIPP said.

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.

(JPN/Agencies)