The Indian government is reportedly considering a proposal to allow mutual funds to float special schemes, in which part of the corpus or total assets can be invested abroad.
The new scheme under consideration will fall under a pending proposal initiated by former finance minister to allow Indians to invest up to $25,000 overseas annually. The Reserve Bank of India (RBI) announced the original proposal for this facility a year ago. However, outflows were only allowed for deposits in the absence of investment guidelines.
Mutual funds (MFs) are currently allowed to buy stocks in companies that are listed on overseas stock exchanges, subject to these companies having a 10% stake in an Indian entity. This rule has restricted the number of available foreign stocks for investment by Indian-domiciled mutual funds to about 50 companies.