The Government is undertaking sustained reforms to strengthen India’s standing as a leading destination for global investment. To deepen the capital market, it has introduced a series of reforms to increase Foreign Portfolio Investor (FPI) participation in Government Securities (G-Secs). Key measures include tax exemptions on interest income, long-term capital gains (LTCG) and short-term capital gains (STCG), expansion of specified securities under the Fully Accessible Route (FAR), and streamlined investment norms.
These reforms aim to attract stable long-term foreign capital, deepen the G-Sec market, and strengthen India’s debt market by broadening and diversifying the investor base. Greater foreign participation will provide an additional source of funding for infrastructure, manufacturing, urban development, climate initiatives, and other national priorities. It will also improve market liquidity and price discovery, support the development of a smoother yield curve, reduce government borrowing costs, strengthen financial market benchmarks, and enhance the transmission of monetary policy across the economy.
The reforms are poised to attract long-term institutional investors such as pension funds, insurance companies, and sovereign wealth funds, leading to more stable and sustained capital inflows. They are also expected to boost foreign exchange inflows and strengthen the resilience of India’s financial markets.
