FPI reforms open doors, but will overseas capital follow?

RBI, Sebi for rule changes as India hopes to revive interest after lower-than-expected inflows

- Neha Joshi & Shayan Ghosh

India's financial regulators have eased rules to attract more foreign capital into the debt market, after inflows tied to its global bond index inclusion fell short of expectations.

The Reserve Bank of India (RBI) has relaxed investment limits for corporate bonds and the Securities and Exchange Board of India (Sebi) has proposed easing access to government securities.

Once implemented, these measures will potentially enhance foreign investors' ability to access India's corporate and sovereign debt markets. "I would look at it more as a part of the series of reforms, which both RBI and Sebi are trying to bring in, to make sure that doing business in India is easier," said Madan Sabnavis, chief economist at Bank of Baroda.

A number of bonds are part of those global indices and a large amount of money was supposed to come in but hasn't in the way "we had forecasted earlier," he said. "This is to tell foreign investors that if you want to come to India, there should not be any concern of regulatory hurdles."