12 of the Foreign Exchange Management Act, 2016, will be “not applicable” to foreign exchange markets that are “regulated by foreign authorities”, the finance ministry said.
The finance ministry’s statement said that the rules governing the exchange of financial information will not apply to financial services businesses that are owned by Indians, or “are registered with Indian authorities”.
The ministry did not say what the criteria will be to justify that the exemption would not apply.
The move comes after the finance minister announced in March that foreign banks and investment funds will not be allowed to open accounts or to invest in Indian companies that are based in countries with anti-dumping and countervailing duties (CVDs) on foreign goods and services.
The ministry said in April that it had decided to “diversify” foreign financial markets, and to open up more opportunities for foreign investors.