FDI up to 100 per cent has been permitted under the automatic route in contract manufacturing and coal mining. 12. With regard to foreign portfolio investment (FPI), several measures have been undertaken to create an investor-friendly regime and to put in place a more predictable policy environment. FPI limits are now being revised on a half yearly basis under the medium-term framework.
FPI has been allowed in municipal bonds within the limits set for State Development Loans (SDLs).1 Greater operational flexibility has been granted to FPIs under a Voluntary Retention Route (VRR) which facilitates investment in G-secs, SDLs, treasury bills and corporate bonds while allowing investors to dynamically manage their currency and interest rate risks. The initial response to the VRR scheme has been encouraging.