Summary：**India must finish the capital account reforms begun in 1991** *India's capital controls have tran

referrerpolicy="no-referrer"
style="max-width:100%;height:auto;display:block;margin:0 auto;">

**India must finish the capital account reforms begun in 1991**
*India's capital controls have transformed from restrictive permissions to more refined regulations. As the nation pursues its economic aspirations, a more open and predictable capital framework is essential. Recent moves by regulators were unexpected and lack…*

### Introduction
Three decades after the landmark liberalisation of 1991, India’s capital account remains a patchwork of permissions, notifications and sector‑specific caps. While the current regime has shielded the economy from volatile swings, it also creates friction for investors seeking seamless entry and exit. Policymakers now face a choice: deepen the reforms that opened the trade and current accounts, or retain a cautious stance that may hinder long‑term growth.

### Key Developments
In the past six months, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) announced a series of adjustments:
- Raising the external commercial borrowing (ECB) limit for infrastructure firms from $500 million to $750 million per year.
- Introducing a “green channel” for foreign portfolio investors (FPIs) to access government securities without prior approval, subject to a monthly cap of ₹10 billion.
- Streamlining the process for overseas direct investment (ODI) by allowing automatic routes for sectors such as renewable energy and pharmaceuticals, provided the investment does not exceed 10 % of the investor’s net worth.

These steps signal a shift from case‑by‑case clearance to rule‑based limits, yet they retain discretionary elements that market participants describe as “unexpected” and “inconsistent”.

### Industry Analysis
Analysts note that the reforms improve predictability for long‑term capital, especially in infrastructure where financing gaps exceed ₹5 trillion. However, the persistence of approval‑driven mechanisms for short‑term debt and equity inflows creates arbitrage opportunities and raises concerns about regulatory overreach.

Foreign banks report that the ECB ceiling increase helps them structure larger syndicated loans, but they remain wary of the RBI’s power to impose