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June 2012

A.P. (DIR Series) Circular No. 121, dated 8-5-2012 — Foreign investment in Commodity Exchanges and NBFC Sector — Amendment to the Foreign Direct Investment (FDI) Scheme.

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Presently, foreign investment in commodity exchanges is permitted subject to a composite ceiling of 49% with FDI limit of 26% and FII limit of 23% under Portfolio Investment Scheme (PIS).

This Circular clarifies that:

(a) With respect to foreign investment in commodity exchanges, the FDI component of 26% will be under the Approval Route whereas FII investment of 23% under PIS will be under the Automatic Route.

(b) 100% FDI under the Automatic Route is permitted only in case of ‘financial leases’ (financial leasing activity) and the Automatic Route is not available in case of ’operating leases’ (operating leasing activity).

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