Fidelity may retain comex stake

Fidelity International Limited and Goldman Sachs Group Inc may get approval from the Centre this week to retain their entire stakes in commodity exchanges, allowing them to profit from a surge in trading.

The Cabinet will consider raising overseas investment caps in sectors, including the exchanges and oil refining, trade minister Kamal Nath said in an interview yesterday.

The limit for each foreign investor may be raised to 10 per cent, three people familiar with the proposals said. Goldman and Fidelity own more than 5 per cent stakes each.

"We are going to ease caps in some sectors," Nath said in New Delhi, where he's attending the World Economic Forum.

The rule change would allow Goldman to profit from a surge in trading in India, the world's largest consumer of gold and the second-biggest producer of wheat, sugar and rice.

Foreign investors are barred from buying and selling commodity futures to shield India's 234 million farmers from global price swings.

"Commodities trading is going to be the next hot thing in India," said D H Pai Panandiker, president of the RPG Foundation, an economic policy group based in New Delhi. "With volumes expected to surge substantially, foreign investors clearly see a huge opportunity in that area," he said.

Overseas funds need regulatory approval to take stakes in the Indian commodity exchanges, which offer a wide array of contracts ranging from spices to sugar and soybeans. Turnover surged 68 per cent to 36 trillion rupees ($908 billion) in the year ended March 31.

Goldman, the world's most profitable securities firm, acquired a 7 per cent holding in the NCDEX last year and Fidelity bought 9 per cent of MCX.