Press Information Bureau
Government of India
Ministry of Finance

30-August-2012 16:47 IST

Steps to Attract FIIs

The net investments made by Foreign Institutional Investors (FIIs) under the Portfolio Investment Scheme (PIS) during the last three financial years have been positive.  The details of FIIs investments (Equity +Debt) during the last three financial years are as under:-

 

(Amount in INR Crores)

 

             Six major international credit rating agencies usually rate India’s sovereign debt.  These are : Standard and Poor’s (S&P), Moody’s Investor Services, Fitch Ratings, Dominion Bond Rating Service (DBRS), Japanese Credit Rating Agency (JCRA) and Rating and Investment Information Inc., Tokyo (R&I).  All the six agencies have rated India’s long-term foreign currency denominated sovereign debt as investment grade.  None of these agencies have downgraded the rating on India’s sovereign debt below investment grade.        

            As regards India’s GDP growth rate, there has been a slowdown in GDP growth from 8.4 per cent in 2010-11 to 6.5 per cent during 2011-12.

Government has been making concerted efforts to attract foreign investors to India.  Some of the key steps taken recently are:

• In the Budget 2011-12, the Qualified Foreign Investor (QFI) scheme was introduced allowing foreign investors to invest in Mutual Funds, subject to certain conditions.  On 1^st January 2012, the Government expanded this scheme to allow QFIs to directly invest in Indian Equity Market.  As announced in Budget 2012-13, QFI can now also invest in corporate bonds.
• The limit for FII investment in long-term corporate bonds issued by the companies in the infrastructure sector was raised from USD 5 billion to USD 25billion in March 2011.
• In November 2011, the limit for FII investment in Government Securities and Corporate bonds was raised by USD 5 billion each, thus raising the cap for FII Investment to USD 15 billion in Government Securities and to USD 20 billion in Corporate Bonds
• On June 25, 2012, the FII limit for investment in Government Securities was further enhanced by USD 5 billion raising the cap to USD 20 billion.

This was stated by the Minister of State for Finance, Shri   Namo Narain   Meena in written reply to a question in the  Rajya  Sabha today.

 

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DSM/RS/bs

FII investment liberalisation: expansion of Qualified Foreign Investor access and raised caps to boost foreign portfolio inflows. The Government expanded the Qualified Foreign Investor scheme to allow investments in mutual funds, direct equity and corporate bonds, and progressively raised FII caps for long term corporate bonds and Government securities to broaden market access and attract foreign portfolio inflows.