MUMBAI, June 5 (Reuters) – India on Friday announced a raft of measures to attract dollar inflows into the country, at a time when rising crude oil prices and record outflows from equities have pushed the rupee to all-time lows.
Here are the details:
o All new 15-year, 30-year and 40-year government bonds will be a part of so-called fully accessible route that allows unfettered foreign access; these bonds are part of three global indexes
o Caps on short-term foreign investment in bonds, concentration limits and buying of individual bonds have been done away with
o New Delhi has exempted overseas investors and the BIS from capital gains tax on interest or gains from sale of government bonds
o The Reserve Bank of India will offer a discounted forex swap for external commercial borrowings by state-run companies
o A similar facility will bear the hedging costs for banks that will raise three to five year deposits from non-resident Indians until September end
o Banks will be exempt from statutory fund requirements for these deposits
o RBI will restore time for realisation for export proceeds to nine months and raise limit for investments by non-residents and overseas citizens in equity instruments traded without SEBI registration
o The combined impact could certainly help bridge the $40-50 billion gap on the balance of payments estimated for FY27 – Sakshi Gupta, principal economist, HDFC Bank
o “If global conditions stabilise over the coming weeks, the cumulative capital flow effect could be higher” – Gupta
o The measures are expected to draw a minimum of $30 billion over the next four months, but there are chances of a large upside, if banks leverage FCNR flows well – Kanika Pasricha, chief economic adviser at Union Bank of India
o YES Bank and Emkay Global Financial expect inflows to the tune of $40 billion to $50 billion
(Reporting by Dharamraj Dhutia; Editing by Ronojoy Mazumdar and Mrigank Dhaniwala)
By Dharamraj Dhutia
