Govt announces new FDI norms for FIIs
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The government today announced new Foreign Direct Investment, FDI norms for Foreign Institutional Investors, FIIs. Under the new norms, FIIs can now invest up to 23 per cent in commodity exchanges without seeking prior approval of the government. The Department of Industrial Policy and Promotion, DIPP's consolidated FDI policy and the new norms come in force from today. However, FDI will continue to need the approval of the Foreign Investment Promotion Board, FIPB. At present, foreign investment, within a composite FDI and FII cap of 49 per cent, under the government approval route is permitted in commodity exchanges. Within this overall limit of 49 per cent, investment by registered FIIs is limited to 23 per cent and investment under the FDI scheme is limited to 26 per cent. DIPP 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 has also decided that the consolidated FDI circular will be announced every year instead of six-monthly basis. The next policy would be announced on March 29, 2013.
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