'India won't lift caps on FII investment in bonds'

Reserve Bank Governor Raghuram Rajan on Wednesday said India will not give up all limits on FII investments in bonds as a precondition for inclusion in global indices for bonds.

The major indices of the world are insisting that India lift caps on foreign institutional money inflows before admitting the country, Rajan said, adding that talks in this regard were still on.

“I think that the indices, for the most part want a complete elimination of limits on government securities holdings by international investors,” he said, adding that such a condition cannot be met by the country.
“We are still in talks with some major indices. They (talks) haven't been abandoned,” he said, during an analysts call.

Foreign investors are welcome in the country’s markets and the country has been constantly expanding the limits as and when the investments expand, he added.

Raghuram Rajan pointed out the recent decision to increase the FII play in country's debt markets by $5 billion to $25 billion, after the investments were closing in to breach the $20 billion cap.