Commodity bourses given more time to slash foreign stake

The government has extended time up to September 30 for commodity exchanges to reduce their foreign investment up to 49 per cent and fall in line with the FDI guidelines.

When the Department of Industrial Policy and Promotion (DIPP) fixed a composite ceiling of 49 per cent foreign investment in commodity exchanges in March 2008, they were given time up to June 30, 2009 to bring down the overseas equity equivalent to the cap.

"Difficulties have been brought to the notice of the government," for implementation of the guidelines, DIPP said today.

"The government on consideration and in order to facilitate the existing commodity exchanges to comply with the new guidelines, has now decided to allow a further transition/complying/correction time... Up to September 30, 2009," it said.

The non-compliance of the guidelines, DIPP said, would be a violation of the Foreign Exchange Management Act.

The 49 per cent ceiling on foreign investment in commodity bourses included portfolio by FIIs up to 23 per cent and FDI up to 26 per cent. Further, no single foreign investor/entity were to hold more than five per cent of equity in these companies.