Indian mutual fund industry welcomed the Centre's decision to double the limit on overseas investment by Indian asset management companies to $1 billion with predominantly foreign-owned MFs benefitting the most from it.

"This step is a part of policy to relax restrictions on overseas investment and will help MFs with overseas tie-up", the chairman of Association of Mutual Funds in India, A P Kurien said in Mumbai.

"It is a step to broad-base the investment options for fund managers but looking at appreciation of the rupee against the dollar, it was unlikely that MFs will make overseas investments in the immediate future," Kurien added.

Prudential ICICI chief investment officer Dilip Madgaonkar said the measure would broaden investment opportunities and global research requirement would not be constrained.

On the condition that MFs should have minimum of 10 per cent stake in a company listed on Indian bourses, Madgaonkar said prima facie, MFs could invest in scrips of multinationals like GlaxoSmithkline and Pfizer, which have subsidiaries listed in India.

Sun F&C AMC chief executive Nikhil Khatau said: "It is a step to move ahead on capital account convertibility and we already have a scheme in place for overseas investments."

The rupee has become strong against the dollar and "we have not begun to exhaust existing limits," he said.

Rajesh Babu, MF industry analyst with Crisil, said those with foreign affiliation and backup of international research would have an edge while making overseas investment.