Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
Press Note No.8 (2012 Series)
Subject: Policy on foreign investment in Power Exchanges
1.0 Present Position:
1.1 As per extant policy, FDI, up to 100%, under the automatic
route, is permitted in the power
sector (except atomic energy). This includes generation,
transmission and distribution of electricity,
as well as power trading, subject to the provisions of the
Electricity Act, 2003.
1.2 Extant policy, however, does not provide any specific
dispensation for foreign investment in
power exchanges.
2.0 Revised Position:
2.1 The Government of India has reviewed the position in
this regard and decided to permit
foreign investment, up to 49%, in Power Exchanges,
registered under the Central Electricity
Regulatory Commission (Power Market) Regulations, 2010, as
below:
(i) Such foreign investment would be subject to an FDI limit
of 26 per cent and an FII limit of
23 per cent of the paid-up capital;
(ii) FII investments would be permitted under the automatic
route and FDI would be permitted
under the government approval route;
(iii) FII purchases shall be restricted to secondary market
only;
(iv) No non-resident investor/ entity, including persons acting
in concert, will hold more than 5%
of the equity in these companies; and
(v) The foreign investment would be in compliance with SEBI
Regulations; other applicable
laws/ regulations; security and other conditionalities.
3.0 Insertion of new paragraph 6.2.26:
3.1 Accordingly, a new paragraph 6.2.26 is inserted under
'Circular 1 of 20 12-Consolidated FDI
Policy', effective from April 10, 2012, as below:
6.2.26 Power Exchanges
6.2.26.1 Power Exchanges registered 49% (FDI &FII)
Government
under the Central Electricity (for FDI)
Regulatory Commission
(Power Market) Regulations,
2010
6.2.26.2 Other conditions:
(i) Such foreign investment would be subject to an FDI limit
of 26 per cent and an
FII limit of 23 per cent of the paid-up capital;(ii) FIr
investments would be permitted under the automatic route and FDI would be
permitted under the government approval route;
(iii) FIr purchases shall be restricted to secondary market
only;
(iv) No non-resident investor/ entity, including persons
acting in concert, will hold
more than 5% of the equity in these comp:Uies; and
(v) The foreign investment would be in compliance with SEBI
Regulations; other
applicable laws/ regulations; security and other
conditionalities.
4.0 The above decision will take immediate effect.
Joint Secretarx.te-th
D/o IPP File No.: No. 5/5/2012-FC.I dated: 20thSeptember, 2012
Copy forwarded to:
1. Press Information Officer, Press Information Bureau- for
giving necessary publicity.
2. BE Section in the Department of Industrial Policy and
Promotion- for uploading the Press
Note on DIPP's website.
