The government is considering hiking the FII investment sub-limit in bonds to $25 billion without disturbing overall $30-billion FII debt cap, said a finance ministry official.
"There is a demand and there is a space to raise FII limit in government debt... No intent to increase overall $30 billion FII debt cap," said finance secretary Arvind Mayaram.
Currently, India allows FIIs of up to $30 billion in government bonds, including $20 billion for all and $10 billion for specific investors like foreign central banks, sovereign wealth funds, pension funds and insurance funds. The limit under $20 billion has been almost fully exhausted. "There is demand and space for rejigging existing FII debt window, we may use $5 billion unutilised sovereign wealth funds (SWF) as part of FII debt cap," Mayaram said.