Can you just dissect this news for us, the fact that the threshold limit for FPI disclosure has gone from 25,000 to 50,000. How important is that? And will that really open a large window?
Sunil Subramaniam: It is very important. And I will tell you, the reason for that is that when you are disclosing, you are giving out a lot of information in the market. And so, when you come and buy, people know that, A) this fund is buying, this person is buying, and half the thing in the market in making money is to be surprised, it is the information asymmetry.
As a big investor, once you buy, people follow in your trail and then you are not able to subsequently buy. So, the 25,000 crore rule was a bit restrictive that you would look for smaller funds to go in and avoid disclosing so that you could go in and buy the good stock and not let other people know about it.
Now doubling this clearly then improves the amount of such small ticket things that can come in because people love to be in privacy. Nobody likes to disclose. It is not that they are trying to hide anything, but just from a market perspective, the surprise element goes away, that is number one.
Second is, Sebi talked about ease of doing business. You look at it from SEBI’s own perspective. They have to verify all these disclosures and all of that. Now they are straight away, probably looking from a paperwork, they have not disclosed that.
But from a paperwork perspective, at the bottom of the pyramid, you have lots of companies at that threshold. So, probably SEBI’s own ease of doing business is for SEBI itself, that the amount of paperwork they have to do in monitoring people who have disclosed and taking care of them is there. So, both these factors indicate that it is a very open SEBI now, who is willing to engage and make things better for foreign investors to come in.
Overall, it is a signal in the right direction and I do think that it will have significant effect in terms of lots of smaller player, FPIs coming in and investing. So, it opens the door for a diversification of the flows and less dependence on a few big ticket, sovereign wealth funds and all to come in.
No, in general, I am saying that it is not that FIIs have not been coming because of this restriction. I mean, my limited point is that this is a good to have window, but it is not going to have an incremental impact right away, that is my limited point.
Sunil Subramaniam: No, that does not matter. See, point is that when somebody is looking at India and he says, oh, this is a disclosure market, then he puts it on the back burner.
Now, he says, no, up to 45,000 crores, 50 being the limit, 45 I can. It comes into his radar. Obviously, all other things have to come in for the money to come in, but when the gates open, you will have a lot more funds ready to come in.
Now, that moment could come in April when the reciprocal tariffs situation gets clearer, it could come in mid to end April when the earning season comes out clearer. So clearly, there are a lot of triggers for the money to actually come in. But what this does is it opens the window to a large number of small ticket FPIs to be able to come in.
So obviously this will click in at a time when other things leave us click it. But obviously, it is an important decision which is being conveyed to the FPIs that come in, we are working to make things easier for you, so that actually improves India’s perception also in the international marketplace.
So, it is an enabler. It is not necessary that it is immediately going to reflect, like you said, but it is an enabler which could, when things go right, maybe result in avalanche of money coming in instead of maybe a trickle, that kind of a difference.
