Chidambaram Says India Will Revisit Bond Limits When Reached

By Jurjen van de Pol and Celeste Perri

Nov. 20 (Bloomberg) -- India will reconsider the nation's limits on foreign institutional investment in Indian bonds once the current levels are reached, Finance Minister Palaniappan Chidambaram said.

``There's enough headroom,'' he said today after a presentation in Amsterdam. ``If we reach the limit, we will certainly revisit the limits. We haven't touched that level.''

India on Oct. 15 doubled the limit for foreign institutional investors in local corporate bonds to $6 billion. It left the limit on overseas investments in Indian government bonds unchanged at $5 billion. Chidambaram said foreign direct investment in the country hasn't yet been affected by the global financial crisis.

Easing overseas investment rules may help increase dollar supply into the economy and check the worst fall in the rupee in 17 years. The rupee today tumbled to a record low against the dollar as a rout in global equities added to speculation investors will increase sales of riskier emerging-market assets amid the deepening economic slump. Some foreign investors have pulled money from India because of pressure at home, Chidambaram said.

India deserves a permanent seat on the United Nation Security Council, the minister said. ``We'll take our place at the table when we earn it,'' he added.

To contact the reporters on this story: Jurjen van de Pol in Amsterdam jvandepol@bloomberg.net; Celeste Perri in Amsterdam at at cperri@bloomberg.net.