The government has announced the new revised consolidated foreign direct investment (FDI) policy on Tuesday, under which, it has relaxed the regulations for investments from foreign institutional investors (FIIs) in commodity exchanges in the country.

Under the new rules, the FII’s will not require a government approval before investing in these exchanges. The government has held the cap for FII investment in commodity exchanges at 23 per cent. The commerce and industry ministry’s department of industrial policy and promotion (DIPP) pointed out that government’s approval will still be required for the FDI component of investment up to 26 per cent in commodity exchanges.

“This change aligns the policy for foreign investment in commodity exchanges with that of other infrastructure companies in the securities markets, such as stock exchanges, depositories and clearing corporations,” the department said.

Analysts were of the view that the scrapped provision of FIIs getting approval from the Foreign Investment Promotion Board was not required. They said that the provision was creating problems for investors who were opting for a share sale in the country.

The department has not made any changes to the FDI policy for single-brand retail and incorporated it into the new consolidated FDI policy as approved by the Union cabinet.