The Indian government has granted tax relief to foreign investors investing in government securities, removing capital gains tax on eligible investments. The measure is expected to encourage greater participation from global investors and strengthen India’s debt market.
The exemption covers specified government bonds available under the Fully Accessible Route, which permits foreign investors to purchase designated securities without restrictions. The move addresses a long-standing demand from international investors seeking a more competitive tax framework.
Officials said the decision will support India’s efforts to attract long-term overseas capital and improve the efficiency of domestic financial markets. It also complements recent initiatives aimed at increasing foreign participation in government debt.
The reform comes as Indian government bonds gain greater visibility among global investors following their inclusion in major international bond indices. Experts believe the tax exemption will make Indian securities more attractive by improving post-tax returns and reducing investment-related costs.
The tax relief is expected to have a positive impact on the rupee by attracting additional foreign currency inflows. Stronger foreign investment can provide support to the currency and enhance overall market stability.
Financial analysts said the decision could lead to higher foreign inflows into the bond market, helping improve liquidity and diversify the investor base. Increased participation from overseas funds may also contribute to lower borrowing costs for the government over time.
