Deadline on lower foreign stake extended

Deadline on lower foreign stake extended
PTi
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First Published: Wed, Sep 30 2009. 10 02 PM IST
Updated: Wed, Sep 30 2009. 10 02 PM IST
New Delhi/Mumbai: The Union government on Wednesday gave a second extension of up to 31 March to commodity exchanges to pare foreign shareholdings to 5%.
Some foreign investors continue to hold above the permissible 5% limit in commodity exchanges.
The department of industrial policy and promotion, or DIPP, said this was the last opportunity for the exchanges to comply with the 19 August 2008 guidelines, which mandate that a foreign investor cannot hold more than 5% in a commodity exchange.
Over and above this, the regulations require commodity exchanges to cap their overall foreign investments at 49%, with portfolio investments capped at 23% and foreign direct investments at 26%.
Non-compliance would be a violation of the Foreign Exchange Management Act.
“Difficulties have been brought to the notice of the government in complying with the provisions...within the stipulated time frame,” DIPP said in a statement.
It had set a deadline of 30 June and later extended it to 30 September.
At present, there are three commodity exchanges in India—Multi Commodity Exchange of India Ltd (MCX), National Commodity and Derivatives Exchange Ltd (NCDEX) and National Multi-Commodity Exchange of India Ltd (NMCE).
NCDEX has two foreign stakeholders—Goldman Sachs Investments (Mauritius) Ltd and Intercontinental Exchange (ICE), which recently trimmed their holdings to 5% each from 7% and 8%, respectively.
In August, Shree Renuka Sugars Ltd bought a 2% stake in NCDEX from Goldman Sachs and a 3% stake from ICE to hold 5% in the exchange.
MCX, the country’s largest commodity exchange, still has an overseas investor holding of more than 5%. Fidelity Fund (Mauritius), an affiliate of Fidelity International, has a 9.21% stake in the bourse.
Citigroup Strategic Holdings (Mauritius), NYSE Euronext, and Merrill Lynch Holdings (Mauritius) have 5% stakes each in MCX.
Mint’s Anirudh Laskar in Mumbai contributed to this story.
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First Published: Wed, Sep 30 2009. 10 02 PM IST