India to lift foreign investment ceiling on some bonds: Economic advisor
New Delhi, India - India will remove foreign investment limits on some sovereign notes as part of its attempts to get inclusion in global bond indexes, the country’s chief economic advisor said.
Issuing new debt with no limits on investments by foreigners will be the first ‘necessary step’ for the inclusion in the indexes, Krishnamurthy Subramanian, the economic advisor, said in an interview in New Delhi on Monday.
The country’s administration aims to fulfill other conditions for the inclusion in the fiscal year beginning April 1, the advisor said.
Finance Minister Nirmala Sitharaman announced the plan to remove the limits on February 1 as the government tries to push through a record borrowing plan of R7.8tn. The administration runs a budget deficit, and the country as a whole has a current account deficit, meaning it needs funds from abroad to cover the gap between what it earns in exports and spends on imports.
Overseas investors hold less than four per cent of the almost R60tn of sovereign bonds issued by India, and the government has set a six per cent limit on foreign ownership. Getting added into global indexes could help lure more foreign funds as Prime Minister Narendra Modi sets his sights on doubling the size of the economy.
India may sell notes worth US$5bn with no caps on foreign investment, Reuters had reported last week, citing finance ministry officials it didn’t identify.
Sovereign bonds have rallied since the announcement.