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Events / Regulatory / India exempts FPIs from bond tax
Regulatory tax exemption

India exempts FPIs from bond tax

Analysis based on 22 articles · First reported Jun 04, 2026 · Last updated Jun 10, 2026

Sentiment
60
Attention
7
Articles
22
Market Impact
Direct
Live prominence charts, article sentiment distribution, and event development timeline available on the NewsDesk Dashboard
Market Impact

The tax exemption and RBI measures are expected to significantly boost foreign portfolio investment into India's government bond market, leading to increased capital inflows. This influx of foreign capital is intended to strengthen the India — Indian rupee and deepen the domestic debt market, potentially leading to India's inclusion in major global bond indices.

Financial Services Government Debt
Event Summary

India has implemented significant reforms to attract foreign capital into its government bond market. The government, led by Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, promulgated an ordinance to exempt foreign portfolio investors (FPIs) from income tax on interest income and capital gains arising from investments in Fully Accessible Route (FAR) securities, effective retrospectively from April 1, 2025. This move aims to counteract pressure on the India — Indian rupee and deepen the bond market. Concurrently, the State Bank of India (RBI) expanded the universe of securities available under FAR and removed various investment limits for FPIs. These combined measures have already led to substantial FPI inflows, with over Rs 8,794 crore invested in FAR securities since the exemption. Analysts believe these steps will strengthen India's case for inclusion in major global bond indices.

Key Actions
100 India plans to scrap tax
90 India promulgated ordinance
90 State Bank of India expanded universe of securities
87 Nirmala Sitharaman committed to drive India
85 India granted full taxing rights
85 State Bank of India removed limits
76 State Bank of India increased GDP estimate India
Entities Involved
cnt
India
India's bond market is being opened further to foreign investors through tax exemptions and RBI measures, aiming to attract foreign capital and support the India — Indian rupee. This move is expected to deepen the bond market and facilitate greater global participation.
Importance 100 Sentiment 65
per
Nirmala Sitharaman
Nirmala Sitharaman, as the Finance Minister of India, announced the government's commitment to economic reforms and the tax exemption for FPIs, directly influencing the policy changes that are attracting foreign investment.
Importance 80 Sentiment 50
stock
State Bank of India
The State Bank of India expanded the universe of securities available under the Fully Accessible Route (FAR) and removed investment limits, complementing the government's tax exemptions to attract foreign capital.
Importance 75 Sentiment 55
curr
India — Indian rupee
The tax exemption aims to attract foreign capital to counteract pressure on the India — Indian rupee, which has weakened due to higher oil prices and foreign portfolio outflows from equities.
Importance 70 Sentiment 40
per
Narendra Modi
Narendra Modi is mentioned as the leader of the government committed to driving economic reforms, providing political backing to the policies.
Importance 30 Sentiment 45
priv
The Economist
The The Economist was the first to report on India's plan to scrap capital gains tax, acting as a source of information for the event.
Importance 20 Sentiment 0
priv
Financial regulation in India
The Financial regulation in India Ltd (CCIL) provided data on FPI holdings in FAR securities, showing the increase in investments after the tax exemption.
Importance 10 Sentiment 0
priv
Arete Capital
Arete Capital, through its vice-president Mataprasad Pandey, provided commentary on the optimism from FPIs and the potential for India's inclusion in global bond indices.
Importance 10 Sentiment 0
priv
Bloomberg News
Bloomberg's sovereign bond index is mentioned as a major global bond index that India aims for inclusion in, which would be strengthened by the FPI inflows.
Importance 10 Sentiment 0
priv
Emkay Global Financial Services
Emkay Global Financial Services, through its chief economist, provided an expert opinion on the potential impact of India's tax easing plan on capital flows.
Importance 10 Sentiment 0
index
JPMorgan Emerging Market Local Currency Index
India's efforts to lure foreign capital, including scrapping investment limits, helped it gain entry to the JPMorgan Emerging Market Local Currency Index.
Importance 10 Sentiment 0
index
Bloomberg Emerging Market Local Currency Bond Index
India's efforts to lure foreign capital, including scrapping investment limits, helped it gain entry to the Bloomberg Emerging Market Local Currency Bond Index.
Importance 10 Sentiment 0
index
Bloomberg Global Aggregate Index
Bloomberg deferred a decision to include India in its more widely tracked Bloomberg Global Aggregate Index, a decision that may be influenced by the proposed tax changes.
Importance 10 Sentiment 0
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