What the does the expansion of the FPI limits by the government of India mean for FPI investments into India?

Soon after the MSCI decided to defer its plans to increase the weightage of India in the benchmark indices by close to 100 bps, the government has acted fast. In fact, the legroom for foreign portfolio investors (FPIs) has been increased in several companies after government decided to treat sectoral limits as FPI investment limit became effective from April. NSDL and CDSL released list of companies where additional shares are available for FPIs. These higher limits can attract billions in overseas flows as the current FPI sentiment is not very conducive. This list includes companies like Kotak Bank and L&T. However, the FPIs may really wait for the MSCI to increase the weight of India as that would be a signal for the passive funds like ETFs and SWFs to move into Indian equities in a big way.