India Raises Cap for Foreign Institutional Investors

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Sept. 27 – India has raised the cap for foreign institutional investors (FII) wanting to invest in government securities and corporate bonds by US$5 billion each.

Investment in government securities will now be allowed for up to US$10 billion from US$5 billion and corporate bonds limit increased to US$20 billion from US$15 billion. The change in policy comes at a time when FIIs have been increasingly investing in Indian debt and equity markets.

It would also support greater long-term FII investment and funnel much needed funding to infrastructure projects.

The policy has been reviewed in the context of lndia’s evolving macroeconomic situation, its increasing attractiveness as an investment destination and need for additional financial resources for its infrastructure sector while balancing its monetary policy, the government statement said.

“The move to stipulate that incremental FII investment in corporate bonds should go to companies in the infrastructure sector seems a practical and sensible step,” added Jagannadham Thunuguntla, Equity Head, SMC Capitals Ltd.

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