Article

Performance Magazine - issue 28

January 2019

After experiencing a bitter economic crisis in 1991, India significantly liberalized its economy in 1992. The reform saw considerable easing of government control over foreign trade and investment and the abolition of the License Raj across many sectors. The economic reform also resulted in the increased access of foreign investment in several sectors, with the list expanding ever since. Foreign investors were formally allowed to access Indian capital markets in late 1992. In 2014, the former FII regime was replaced with the Foreign Portfolio Investor (FPI) regime, which allowed all types of investors to invest in Indian capital markets subject to anti-money laundering and KYC checks. A FPI license is now issued by the local sub-custodian unlike in the past where the FII license was issued by the regulator. SEBI remains committed to FPI reforms and I have personally witnessed the efforts as a member of the H R Khan Committee.

During the last 26 years, the market capitalization of Bombay Stock Exchange (BSE), Asia’s oldest stock exchange has grown from US$123 billion to US$2 trillion. The current market capitalization of the other leading stock exchange i.e. the National Stock Exchange (NSE) is more than US$2.27 trillion making it the world’s eleventh largest stock exchange.

The Indian economy is currently the sixth largest in the world in terms of nominal GDP at US$2.6 trillion. Since liberalization, India’s GDP has grown at an average rate of 6 percent to 7 percent year on year and since 2014 (excluding 2017) Indian economy has been the fastest growing major economy worldwide. India remains an attractive destination for long-term growth, relying on the positive factors such as the population dynamics, the growing middle class and the continued push towards economic reform.

After experiencing a bitter economic
crisis in 1991, India significantly liberalized
its economy in 1992. The reform saw
considerable easing of government control
over foreign trade and investment and the
abolition of the License Raj across many
sectors. The economic reform also resulted
in the increased access of foreign investment
in several sectors, with the list expanding
ever since. Foreign investors were formally
allowed to access Indian capital markets in
late 1992. In 2014, the former FII regime was
replaced with the Foreign Portfolio Investor
(FPI) regime, which allowed all types of
investors to invest in Indian capital markets
subject to anti-money laundering and KYC
checks. A FPI license is now issued by the
local sub-custodian unlike in the past where
the FII license was issued by the regulator.
SEBI remains committed to FPI reforms and
I have personally witnessed the efforts as a
member of the H R Khan Committee.

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