The stage is set for foreign investors to invest in India's commodity exchanges. The Manmohan Singh Cabinet will give formal approval this week on allowing foreign investment in commodity exchanges.
Officials said allowing foreign direct investment in commodity exchanges on the lines of stock exchanges is one of the items to be discussed in this week's Cabinet meeting, scheduled for Wednesday.
Soon after the Cabinet approval, the Reserve Bank of India will issue guidelines on this shortly. Last year, RBI had allowed foreign investment in the Indian stock exchanges.
The RBI guidelines with regard to investment in the commodity exchanges are expected to be based on the recommendations of the consumer affairs ministry submitted a month ago.
This could be on the lines of last year's RBI decision to allow foreign investment up to 49
per cent in the stock exchanges.
While individual foreign investors can invest up to five per cent in India's stock exchanges, there is a cap of 26 per cent on FDI and of 23 per cent on investment by Foreign Institutional Investors.
This will open the gates of Indian commodity exchanges for investors like the New York Mercantile Stock Exchange, which will be allowed to pick up as high as 49 per cent stake in bourses like the Multi Commodity Exchange.
The Forward Markets Commission had directed all exchanges not to change their shareholding pattern after world's leading investment bankers Goldman Sachs had brought stakes in the National Commodities and Derivatives Exchange.