Foreign players are trying to cash in on the Indian economic growth. Strong Indian capital market is one of the major attractions among the foreign players. After demutualization, time has ripened to allow FDI in Indian bourses. This article discusses the related issue.

Well-developed exchanges are one of the most important features of any high growing economy. Whether developed or developing economy, both want strong and technically sound financial markets. Looking back to Indian marketplaces, the stock exchanges began with conventional broker-driven and gradually transformed into electronic and corporatized exchanges. Recently, conversion of exchanges into corporate entities that separates the ownership and trading rights of an exchange is one of the important steps towards making Indian exchanges a global entity.

Now exchanges are like any other corporate house that makes profits and mobiles resources of their own and proves its worth to the shareholders. The income of the exchanges, prior to demutualization, was only from the sale of membership rights. Now, they have to face a stiff competition domestically to perform well. The process of demutualization for most of the regional stock exchanges and Bombay Stock Exchange (BSE) is already over. Perhaps, this is the right time to revive the weak regional stock exchanges and strengthen marketplaces of exchanges. After making bourses a corporate body, the time has ripened to allow Foreign Direct Investment (FDI) in Indian bourses. With several foreign players looking at taking stakes in Indian bourses, government and other related authority should frame new regulations on the divestment of corporatized exchanges on a priority.

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