Should foreigners be restricted in Indias derivatives markets as a matter of policy?
As in other areas of industry and commerce, the key objective for policy in India should be to obtain the best quality of products and services for India’s economy, ensure conditions of intense competition on the domestic market, and to employ Indian labour and Indian capital at the highest possible levels of productivity. Given these objectives, the nationality of the ultimate owners of a firm operating on Indian soil has little importance. In the case of all derivatives, foreigners should be allowed free access to trading and brokerage on India’s derivatives markets. This will help improve the quality of India’s derivatives markets, and help the dissemination of knowledge about the risk management capabilities that these markets supply to the community of foreign investors. Hurdles to this level of liberalisation make it difficult for us as a country to realise the full potential of the investment that can be attracted into India given the level of development of our financial system
