India Unveils Tax Breaks, Bond Market Reforms to Woo Foreign Investors as RBI Seeks Dollar Inflows
The move follows $27.6 billion in foreign equity sales since January as India eases rules to draw capital and support the rupee.
- On Friday, the Indian government scrapped capital gains and withholding taxes on foreign investment in government bonds, effective April 1, 2026, while the Reserve Bank of India removed investment limits for foreign portfolio investors.
- Mounting Balance of Payments deficits and significant foreign portfolio outflows prompted these measures, as economists estimate the BoP deficit could touch $60 billion in FY27.
- Axis Bank economists project potential inflows of $45-50 billion over two years, and RBI Governor Sanjay Malhotra expects a "much better BOP this year" from these measures.
- State Street Global Advisors economist Krishna Bhimavarapu called the move a "step in the right direction," noting debt flows provide a "quasi-open, tax-efficient window" for global investors to buy Indian debt.
- The Reserve Bank of India also expanded the Fully Accessible Route to include new 15-, 30- and 40-year bonds, aiming to support government borrowing and attract foreign capital for debt instruments.
16 Articles
16 Articles
India unveils tax breaks, bond market reforms to woo foreign investors as RBI seeks dollar inflows
India unveiled a package of tax breaks and market reforms to attract foreign capital, including tax exemptions for overseas investors in government bonds, wider access to sovereign debt and measures to boost dollar inflows, as the RBI seeks to strengthen the country's external position amid global uncertainty and FPI outflows
Times of India
The Economic TimesGovt scraps capital gains tax on foreign investment in bonds
India has eliminated long-term capital gains tax on FII investments in government securities, effective April 1, 2026, to attract foreign capital and support the rupee. The RBI also expanded the Fully Accessible Route for government bonds and raised investment limits for NRIs and OCIs to boost foreign portfolio investments amid market pressures.
In a significant move to attract foreign investment, the Modi government has decided to remove the capital gains tax on foreign investors investing in Indian government bonds. The Union Cabinet approved this proposal on Wednesday (June 3, 2026) to boost capital flows, strengthen the rupee, and cushion the economy from the impact of high crude oil prices due to the Iran conflict. According to an India Today report, the Cabinet also approved an o…
India Exempts Foreign Investors from Capital Gains Tax on Government Securities in Bid to Bolster Rupee and Attract Stable Capital
In a significant move to shore up foreign investor confidence and stabilize its currency, India on Friday announced a tax exemption for foreign institutional investors (FIIs) and the Bank for International Settlements on capital gains and interest income from government securities. The decision, issued through an executive ordinance as Parliament is not in session, aims […] The post India Exempts Foreign Investors from Capital Gains Tax on Gover…
Coverage Details
Bias Distribution
- 34% of the sources lean Left, 33% of the sources are Center, 33% of the sources lean Right
Factuality
To view factuality data please Upgrade to Premium
