Since 1991, when the then Finance Minister, Dr. Manmohan Singh, under the Prime Ministerial tenure of P V Narasimha Rao, proposed to open up the Indian economy under the structural adjustment program, there has been a significant move in various policies of the Indian Government.
The various measures undertaken by the government have emphasized more on shifting from administered regime of official borrowings to private capital flows-in the form of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI). Since then, various steps have been undertaken to keep the doors of the Indian economy open to foreign investment and earlier restrictions have been relaxed. The process of integration of Indian financial markets with the global markets has been done in two ways. One way was to invite the Foreign Institutional Investors (FIIs) to Indian capital markets and the other way was to permit Indian companies to raise funds from the global markets through the issue of equity instruments such as Global Depository Receipts (GDRs) and other debt instruments.
As a part of this move, in his Budget speech for the year 1992-93, the Finance Minister Dr. Manmohan Singh had announced a proposal to invite FIIs such as Pension Funds, Mutual Funds, Investment Trusts, Asset Management Companies, etc. to the Indian capital market. Since September 14, 1992, FIIs have been permitted to invest in all the securities traded in the primary and secondary markets, including the equity and other securities/instruments of companies, which are listed/to be listed on the stock exchanges in India including the OTC Exchange of India. |
