The Reserve Bank of India (RBI) has doubled the annual overseas investment ceiling for individuals under the Liberalised Remittance Scheme (LRS) to $250,000 from $125,000, on the back of record rise in foreign exchange reserves.
''On a review of the external sector outlook and as a further exercise in macro-prudential management, it has been decided to enhance the limit under the LRS to $250,000 per person per year,'' RBI said in its bi-monthly monetary policy statement.
RBI, in consultation with the government, has also decided that all the facilities for release of exchange/ remittances for current account transactions available to resident individuals would also be subsumed under this limit, so as to ensure ease of transactions.
The RBI had, in August 2013, reduced the overseas investment ceiling under the LRS from $200,000 to $75,000 per person in a year, in view of the worsening current account deficit and a volatile rupee.
It was raised to $125,000 in June 2014.
LRS was introduced to facilitate overseas acquisition of property, shares or debt instruments by resident Indians without the prior approval of the RBI.
In mid-January, India's foreign exchange reserves touched a new life-time high of $322.135 billion, driven by higher foreign fund inflows and lower forex outgo on the back of a massive fall in global crude prices.
Foreign funds have been pumping more and more dollars into Indian equities after the Narendra Modi-led government assumed charge in May 2014.
FIIs had pumped in $16.15 billion into Indian equities in 2014, while they have exhausted the cap of $30 billion in government securities. They have parked $32.5 billion in corporate bonds, about 64 per cent of their cap of $51 billion.
Foreign direct investments (FDI) in the country rose by 22 per cent to $18.88 billion during the eight months of the current fiscal, against $15.45 billion in the April-November of 2013-14.
India's current account deficit also narrowed to 1.9 per cent of GDP in the first half of current fiscal from 3.1 per cent of GDP in the corresponding period of 2013-14.