India’s plan to streamline separate
caps for foreign institutional investors (FIIs) and foreign
direct investors (FDIs) will boost its financial markets
infrastructure. But a rumoured exclusion of the banking sector
would negate much of the changes’ impact.
Under the country’s foreign investment
regime, FIIs have lower limits in certain sectors due to the
belief that FIIs are so-called hot money; that they will
quickly sell when there’s signs of any issues.
On July 16, the government’s cabinet
proposed consolidating the separate caps for different
But local press reports indicate that officials from the
Ministry of Commerce and Industry (MCI) intend to exclude two
sectors many thought would benefit most from the changes.
"We’re still waiting for the actual guidelines
to come out, although there’s been a bit of
walking back on the sectors where this would have made the
biggest differences, namely defence and banking,"...