The limit of funds to be invested by foreign investors in the Indian infrastructure sector has been raised with Finance Minister Pranab Mukherjee also allowing mutual funds to accept foreign funds in the national budget presented on Monday.
“It has been decided to permit SEBI ( Securities and Exchange Board of India )) registered mutual funds to accept subscription from foreign investors to meet the KYC (know your customer) requirements for equity scheme,” Mukherjee said while reading out the budget in the Lok Sabha.
“This would enable Indian mutual funds to have direct access to foreign investors and widen the class of foreign investors in Indian equity markets,” he added.
Continuing with the focus on attracting investments to infrastructure, the finance minister also raised the cap on foreign investments into corporate bonds, issued by companies involved in the infrastructure sector.
India is planning to raise about $1 trillion during the 11th five year plan, which starts March 2012, to fund a huge infrastructure development programme.
To enable the flow of funds to the infrastructure sector, the FII limit for investment in corporate bonds with residual maturity of over five years issued by companies in the infrastructure sector is being raised of $20 billion taking the limit to $25 billion.
This will raise the total limit available for foreign investors in corporate bonds to $40 billion.
