India opens stock market to foreign individuals

SpArK

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India opens stock market to foreign individuals


The government said in a statement that it had taken the move "in order to widen the class of investors, attract more foreign funds, and reduce market volatility and to deepen the Indian capital market."




India announced on Sunday that it would open up its stock market to individual foreign investors for the first time, in a major economic reform designed to boost overseas investment.

The Indian economy has grown strongly over the last 15 years and many foreign investors have been keen to enter the market in a fast-developing country of 1.2 billion people.

However recent financial data has been disappointing, with the main Sensex index for the Mumbai market recording a 25 per cent plunge in 2011 and many analysts predicting more falls in 2012.

The government said in a statement that it had taken the move "in order to widen the class of investors, attract more foreign funds, and reduce market volatility and to deepen the Indian capital market."

It said the reforms would be put into operation by January 15.

Previously, foreign investors were only allowed to invest in the stock market via mutual funds or institutional schemes.

India opens stock market to foreign individuals
 

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In response to this act of the Govt. First Post had this to say

Dear FM, are reforms only for foreigners or Indians, too? | Firstpost

It's good to start the year with reforms. Foreigners, including individuals and pension funds trusts, will now be able to invest directly in Indian stocks, instead of indirectly through participatory notes.

Thank you, Dr Manmohan Singh. Thank you, Mr Pranab Mukherjee.

Here's a suggestion, though. A finance ministry statement announcing these changes said "this has been done in order to widen the class of investors, attract more foreign funds, reduce market volatility and deepen the Indian capital market."

Surely, Dr Singh, Mr Mukherjee, we've got this wrong. Do we need foreign investors to "widen" and "deepen" our markets, or do we need Indians?

Why is it that reforms always mean giving foreigners an opportunity here and not Indians? Why is it that reform is always the last resort ("because we need foreign funds right now")? Are reforms not good enough in themselves?
 

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