Foreign institutional investors' (FIIs) ceiling on investment on government securities (G-Sec) has been raised to USD 20 billion from USD 15 billion, Finance Ministry said.
Within this limit, funds handling sovereign wealth, insurance, pension, foreign central banks and multilateral agencies can participate.
Moreover, the lock-in period for FII investment up to USD 10 billion into G-Secs has been reduced to three years from five years.
For the corporate sector, companies in the manufacturing and infrastructure sectors with three-year track record of forex earnings, can now raise external commercial borrowings (ECBs) up to USD 10 billion a year.
Giving details, Joint Secretary in the Finance Ministry Thomas Mathew said: "We are looking at companies which have a large export potential to access money from abroad."
However, these measures failed to cheer the markets, which had built high expectations following Finance Minister Pranab Mukherjee's statement on Saturday that the government would announce steps to improve the conditions.
While returning from his overseas trip, Prime Minister Manmohan Singh had also said problems related to fiscal management will be tackled effectively and credibly.
After the announcements by Finance ministry and RBI, the rupee touched record low of 57.92 against dollar, and Sensex gave away early gains to close 90 points lower.
As a further liberalisation measure, individual overseas investors can now bring in up to USD three billion into mutual fund debt schemes which invest up to 25 per cent of their assets in infrastructure. Earlier, the limit was 100 per cent.
