Union Budget Foreign Investment Analysis by Fairwealth Securities Ltd
Apart from exciting fiscal deficit guidence, another big positive came in from of FM's efforts towards inviting more funds for investment, especially into infrastructure. In this direction, FIIs limit to invest in corporate bonds have been increased by a significant US$ 20 bn taking the limit to US$ 25 billion. Besides, the withholding tax will now attract a lower tax rate of 5% against 20%. This will raise the total limit available to the FIIs for investment in corporate bonds to US$ 40bn. Such moves are likely to spur FIIs into infrastructure sector which has been seen volatile and net seller in last 2-3 months.