India should introduce a wholesale liberalization of rules restricting foreign investors from participating in domestic bond markets, according to a report produced by the country’s main financial markets regulator.
Asia’s third-largest economy currently restricts to $30 billion the amount foreign investors can hold in Indian government debt, and places further limits on the quantity of corporate debt held abroad.
But new research from a panel set up by the Securities and Exchange Board of India suggests that the country’s restrictions “fail to meet the objectives of economic policy” set by the nation’s government.
The SEBI research paper criticizes the existing restrictions as “complicated” and says that the limits have left India less open to foreign debt investment compared with other emerging market peers.
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