The government on Friday hiked the overall limit of investment by foreign institutional investors (FIIs) in government securities (G-secs) and corporate bonds to $75 billion.

The recent increase in investments by FIIs encouraged the union government to hike FII limit in G-secs and corporate bonds without tenure restrictions by $10 billion, or $5 billion each.

The Reserve Bank of India (RBI) and union finance ministry also announced their decision to create a separate $10bn-window for foreign investment in debt, in which there will not be any restrictions on maturity period. A circular in this regard will be issued by the central bank in the coming few days.

The move is expected to help alleviate the pressure on the government to complete its market borrowings and assist firms to raise more funds via bonds required for expansion.

Commenting on the move, Crisil's chief economist DK Joshi said, "This will encourage more capital inflows and create a strengthening bias on the rupee. The additional inflows through the new window will help finance the current account deficit."

The government hiked the FII limit in response to the recent increase in demand for Indian bonds by long-term investors, such as sovereign wealth funds, insurance & pension funds as well as central banks.