The government has asked commodity exchanges to divest foreign equity,
which is more than the limits prescribed under the foreign investment
norms. This process will have to be completed before June 30, 2009.
In March this year, the centre had fixed a composite ceiling for foreign
investment in commodity exchanges at 49 per cent with the condition that
investment under the Portfolio Investment Scheme will be limited to 23 per
cent and that under the Foreign Direct Investment Scheme will be limited
to 26 per cent.
Subsequently, the Department of Industrial Policy and Promotion got reports
that some commodity exchanges had foreign investment above the permitted
levels.
“The commodity exchanges would be required to divest foreign equity equal
to the amount by which the cap was being exceeded in accordance with Press
Note 2 of 2008. Accordingly, all such commodity exchanges are hereby
advised to adhere to the conditions of Press Note 2 by 30 June, 2009,” a
Commerce and Industry ministry release said today.
The commodity exchanges will have to furnish a compliance report on the
directive released today to the Department of Industrial Policy and
Promotion, Department of Consumer Affairs, Foreign Investment Promotion
Board, the Forward Market Commission and Sebi.
“Non-compliance of the conditions of Press Note 2 after 30 June, 2009 would
be a violation of the Foreign Exchange Management Act, 1999.” the release
added.
