FII flows in debt seen capped at $5-10 bn

Government securities, followed by corporate debt, will continue to remain most attractive for FIIs

Domestic debt markets are witnessing huge foreign inflows. So far in April, foreign institutional investors (FIIs) have pumped in close to $3 billion into Indian debt. Earlier, between October 2016 and February 2017, FIIs invested more than $10 billion in the debt market. However, this pace of inflows may not continue, believes Icra.

The FII flows into Indian market in 2017-18 could be between $5 billion and $10 billion as there could be several headwinds, says the rating agency.

"The recent surge of FIIs in Indian debt may not continue in the rest of this financial year, as factors such as a