A highlight has been the proposal to allow non-resident Indians to invest upto 10 per cent through stock markets in Indian companies. The budget has also hiked the ceiling on indivdual NRI/OCBs to 5 per cent. At present, NRIs are allowed to purchase shares in Indian companies in the secondary market subject to a limit of 1 per cent of the total equity for individual NRIs and NRI overseas corporate bodies, with a 5 per cent limit for aggregate NRI/overseas corporate bodies investments in the company.

The new investment norms gives a greater leeway to NRIs to have a larger exposure in any given company. With the share of NRI investment rising to 10 per cent in the overall ceiling of 30 per cent, it is likely togive a boost to prices of companies with good earnings prospects and where the ceiling is yet to hit the stipulated 30 per cent.

This would also bring in higher doses of dollars, thereby boosting forex reserves. In order to attract NRI investments, the budget also proposes launch of a $-denominated `Millinieum Fund' by the mutual fund behemoth, Unit trust of India which will invest in high quality equity and debt instruments.

Besides, The State Bank of India will shortly launch a new Resurgent India Bond denominated in foreign currencies for subscription by NRIs. This will enable NRIs to invest in builiding infrastructure in the country. The budget proposes to allow foreign institution investors put money in unlisted debt securities.

This may set a trend of Indian corporates placing debt with a clutch of FIIs, without going through the process of listing their holdings on the debt segments of various stock exchanges. Howver, this may not click with a large number of FIIs who would like an exitopportunity. The budget has also proposed that there would be no corporate gains tax on stock lending. This would mean a greater freedom to institutions to lend shares.