Tapping investment limit no life-and-debt matter for FIIs

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Sebi has allowed foreign investors to invest directly (on tap) in Indian debt till the utilisation limit reaches
90 per cent. The move will enable foreign institutional investors (FIIs) more flexibility for fund allocation and timing investments. Earlier, FIIs had to purchase permits to invest in debt. FIIs are allowed to invest $25 billion in government debt, excluding $5 billion meant for sovereign wealth funds, and $51 billion in corporate debt. Although, the government has taken a lot of initiatives, including removal of various sub-limits, to ensure overseas investors are attracted towards the debt market, experts believe FIIs may not lap up the available limits in a hurry. The FII investment outlook remains mixed, say analysts. Receding downgrade fears and the deferment of QE tapering could be positives, while the increase in repo rate and concerns surrounding further rate hikes could play spoilsport.