India Liberalises Foreign Ownership Caps In Indian Stock Exchanges

Foreign investment, comprising, amongst others, foreign direct investment (FDI) and portfolio investment, in India is regulated by the (Indian) Foreign Exchange Management Act, 1999 (FEMA). Additionally, the Government of India, from time to time, notifies its policy on FDI and prescribes the sectoral caps and other conditions for FDI (FDI Policy). The FDI Policy is adopted by the Reserve Bank of India (RBI), regulator for foreign exchange transactions, and notified under relevant regulations under FEMA (FEMA Regulations). These regulations are subject to sectoral guidelines issued by regulator/ministry of the relevant sector from time to time (Sectoral Regulations).

The FDI Policy and Sectoral Regulations have been progressively liberalized to permit foreign investment in most sectors. In continuing with its policy of liberalising foreign investment into India, the Government has recently further relaxed foreign investment into Indian stock exchanges. An Indian