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Govt raises foreign investment limit in bonds

Govt raises foreign investment limit in bonds
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Government allowed foreign investors to invest up to $75 billion in Indian bonds compared to the earlier limit of $65 billion.

The government raised this limit by allowing foreign investors to deploy an additional $5 billion each in corporate bonds issued by non-infrastructure companies and government bonds.

Investments in the additional limits provided can be made by long-term investors, such as sovereign wealth funds, central banks, pension funds as well as insurance funds.

Higher level of foreign investor participation is expected to develop IndiaÂ’s shallow bond market and make it easier for local companies to raise funds. Increasing the flow of foreign capital will also help support the rupee.

The limit on corporate bonds issued by infrastructure companies remains unchanged at $25 billion, the official added.

In June, it had raised the limit on foreign investment in government bonds to $20 billion from $15 billion. Besides these steps, the government has also eased foreign-direct investment rules in several sectors such as retail, civil aviation and television broadcasting over the past few months to revive investor interest in the economy.

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