Centre mulls measures to boost foreign investment

The Government of India is considering expanded measures to allow greater flexibility for strategic foreign investors to buy stakes in local companies after offshore investment slumped to a five-year low, three sources said.

Policymakers are looking at the option of foreign investments through a mix of equity and debt, which aren’t permitted currently, the sources said, noting that a final decision was still pending in the matter.

Opening the door to such offshore investments would mark a further liberalisation of the nation’s capital market and foreign capital flows, which are subject to numerous restrictions as the Indian currency is not fully convertible.

The plan to allow use of instruments that are a mix of equity and debt, often termed as “mezzanine instruments” in market parlance, are part of a government plan to shore up foreign direct investment into India, the sources said, declining to be identified as they are not allowed to speak to the media.