Corporate India and bankers predicted that India would now get more foreign investment in the capital markets and in foreign direct investment and that the liquidity of foreign debt paper of Indian companies would increase as many more new investors looking at investment-grade paper would buy Indian debt.

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"The country can be expected to attract significant foreign investment, both in the capital market and through foreign direct investment," Y M Deosthalee, CFO, Larsen & Toubro, said.

"The upgrade is of enormous significance. It is a stamp of confidence on the direction in which the economy is moving. The Indian market will now open up to the class of overseas investors who were holding themselves back because of the sub-investment grade rating," Nasser Munjee, managing director of Infrastructure Development Finance Company, said.

D D Rathi, group executive president and CFO, Grasim Industries, said: "The upgrade will result in increased borrowing by the corporate sector and it should give a further thrust to investment flows. This will significantly help to bring down the average cost of borrowing for the corporate sector, as it will have a softening effect on domestic interest rates."

The upgrade will also help middle-rung corporates to get finer rates in foreign loans. Triple-A rated companies have been enjoying a heavy discount in pricing.

State Bank of India chairman AK Purwar said: "The cost of borrowing for Indian companies will go down as the spread over Libor (London inter-bank offered rate) will go down. It will benefit Corporate India."

The upgrade, according to Munjee, will also enable domestic companies to tap markets overseas to raise funds at competitive rates.

Indian Oil recently raised $150 million (three-year debt) at 68 basis points over Libor. Normally, a triple-A rated company is able to raise overseas debt at 85-90 basis points over Libor while double-A companies need to cough up around 130-150 basis points over Libor.

The cost now can come down by about 25-30 basis points. According to Vishnu Dueskar, CEO, ABN Amro, even when India was not in the investment grade, Indian companies were getting much better pricing because an upgrade had already been factored in.

"Many countries constrained by their sovereign ratings could manage better spreads over Libor due to their inherent strength. While pricing will have a marginal impact, it will provide a psychological boost. Moreover, the liquidity of the foreign debt paper of Indian companies will increase as many new investors looking at investment-grade paper will join in now," he pointed out.

MA Ravikumar, head of global treasury at Standard Chartered, said pricing of Indian debt paper would be finer but the impact would not be significant because a part of the pricing had been discounted long ago.