Goldman may sell pie in Indian comexes

Foreign investors, which have already acquired equity in two of three Indian commodity exchanges may have to cut their stake following a cap of five per cent imposed on single firm in the new FDI policy.

Spelling out the policy, the government has allowed 49 per cent foreign investment in the commodity exchanges subject to a condition that no single investor will hold more than five per cent. Hitherto, foreign investment in these exchanges was neither prohibited nor included in the sector-specific policy.

Both in the Multi-Commodity Exchange and National Commodity and Derivatives Exchange, the holding by a single foreign investor exceeds the limit set by the Union Cabinet on Wednesday. Leading foreign institutional investor Fidelity International had picked up nine per cent stake in MCX in 2006, while Goldman Sachs had seven per cent in NCDEX, Inter-continental Exchange bought eight per cent equity in the bourse.

"We are waiting for the policy details. Even if the government has put a limit of five per cent on single foreign investor, it must have given a special provision to either correct or ratify the existing investment," MCX Deputy Managing Director Joseph Massey told PTI.

NCDEX Chief Executive Officer P H Ravi Kumar said his exchange would abide by the decision on the limit of single investor. The foreign investment in commodity exchanges would be limited to 26 per cent for FDI and 23 per cent for FII.

The clearance would be given by the Foreign Investment Promotion Board and not through automatic route, a senior official in the Department of Industrial Policy and Promotion said.