Government of india sets 49% cap on Direct Foreign Investments on Indian stock exchanges - what will the effect be?
Babu Ghanta
Sep. 17, 2006

Government of india sets 49% cap on Direct Foreign Investments on Indian stock exchanges - what will the effect be?

This will not allow foreign institutional investors take over Indian stock exchanges directly.

But that can be seen as a sign of trying to manipulate open market system. While India is preaching for open global trade, this is definitely designeds to keep the foreign institutional investors from controlling Indian stock exchanges.

The move is not really against the international norms. In US such an 100% aquisition will have to be confirmed by the US Congreaa. It is very unlikely US Congress will for that. while the UK also allows 100 per cent FDI, the law states that national regulations will reign supreme even if the London Stock Exchange is fully acquired by a foreign company or exchange.

Experts says, India may be doing something right here.

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