Foreign firms can hold 15% in stock, commodity exchanges

In a move to attract more overseas capital, the Centre on Wednesday allowed a foreign company to own up to 15% in the domestic stock or commodity exchanges as against 5% currently.

The decision regarding this was taken at a Cabinet meeting chaired by Prime Minister Narendra Modi. “The Cabinet has given its approval for raising foreign shareholding limit from 5% to 15% in Indian stock exchanges,” an official spokesperson said in a tweet.

The Cabinet has also cleared the proposal to allow foreign portfolio investors to acquiresharesthroughinitial allotment in stock exchanges. Themovewouldhelpinglobal competitiveness of Indian stock exchanges by adoption of the latest technology and global best practices, the spokesperson said.

The decision is aimed at attracting more foreign inflows in stock exchanges like BSE and the National Stock Exchange. The approval is a follow-up to the announcement made by Union finance minister Arun Jaitley in his 2016 Budget speech.

“Investment limit for foreign entities in Indian stock exchanges will be enhanced from 5% to 15% on par with domestic institutions. This will enhance global competitiveness of Indian stock exchanges and accelerate adoption of best-in-class technologyandglobalmarket practices,” he had said. PTI