The Indian government has decided to allow foreign investments in infrastructure companies in the securities markets, namely stock exchanges, depostories and clearing corporations. Vide their circulars dated December 22, 2006, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have laid down the following policy:
a) Foreign Investment upto 49% will be allowed in the infrastructure companies with a separate Foreign Direct Investment (FDI) cap of 26% and Foreign Institutional Investment (FII) cap of 23%;
b) FDI will be allowed with specific prior approval of Foreign Investment Promotion Board;
c) FII will be allowed only through purchases in the secondary market;
d) FII shall not seek and will not get representation on the Board of Directors;
e) No foreign investor, including persons acting in concert, will hold more than 5% of the equity in these companies.
