Foreigners Get Easy Access to D-St

Govt. allows qualified foreign investors to invest directly in Indian stocks to boost inflows

India has allowed foreign individual investors, pension funds and trusts to directly invest in equities, in an attempt to shore up investor confidence and attract money from overseas to bridge widening current account deficit. Measures that boost capital inflows are high on the governments agenda as the global downturn led by the Euro zone crisis has led to investors pulling money out of Indian equities. For India, the problem has been compounded by a slump in investor confidence because of policy inaction leading to a sharp fall in new projects. The steps that the government is taking should hopefully help restore some confidence in the market, Finance Minister Pranab Mukherjee told ET. The finance ministry said in a statement on Sunday that the measures were intended to widen the investor class, attract more foreign funds, reduce market volatility and deepen the Indian capital market. The statement described the new category of investors as qualified foreign investors, or QFIs. It will integrate India with the global economy Such flows would be more stable than foreign institutional investors, said Thomas Mathew, joint secretary in charge of capital markets in the finance ministry. The BSE Sensex shed close to 25% in 2011,making it the worst-performing major equity market in 2011.Record inflows $29 billion in 2010 turned into outflows as foreign investors sold shares.

Economics Times, New Delhi, 02-01-2012