Press Information Bureau

Government of India

Ministry of Finance

27-July-2016 20:44 IST

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for raising foreign shareholding limit from 5% to 15% in Indian Stock Exchanges for a stock exchange, a depository, a banking company, an insurance company, a commodity derivative exchange. The Cabinet has also approved the proposal to allow foreign portfolio investors to acquire shares through initial allotment, besides secondary market, in the stock exchanges.

The move will help in enhancing global competitiveness of Indian stock exchanges by accelerating/facilitating the adoption of latest technology and global best practices which will lead to overall growth and development of the Indian Capital Market.

The approval is in pursuance of implementation of the Budget Announcement made by the Finance Minister Shri Arun Jaitley while presenting the Union Budget 2016-17 regarding reforms in FDI Policy with respect to enhancement of investment limit for foreign entities in Indian stock exchanges from 5% to 15% on par with domestic institutions.

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AKT/VBA/SH

Foreign investment limit in stock exchanges increased, allowing greater foreign shareholding and initial allotments by portfolio investors. Approval raised the foreign shareholding ceiling for stock exchanges, depositories, banking companies, insurance companies and commodity derivative exchanges from 5% to 15% and permits foreign portfolio investors to acquire shares via initial allotment as well as the secondary market, aligning foreign shareholding limits with those for domestic institutions and implementing a Budget announcement on FDI policy reforms for market entities.