India is drawing renewed interest from international bond investors after the government introduced a series of reforms aimed at making its debt market more attractive to foreign capital.
Global funds have increased their purchases of Indian government bonds following New Delhi’s decision to eliminate certain taxes on debt investments by foreign investors and relax ownership restrictions. The measures, announced on June 5, are also helping support stability in the Indian rupee.
According to data from the Clearing Corporation of India, overseas holdings in index-eligible government bonds have risen by approximately 326.3 billion rupees (US$3.5 billion) since the reforms were unveiled. Part of the increase reflects the inclusion of additional bonds in the eligible investment category.
Major global asset managers have responded positively to the policy changes. Investment firms including Pictet Asset Management and Neuberger Berman have indicated they are considering increasing exposure to Indian government debt, while M&G Investments has adopted a more optimistic outlook on the market following the reforms.
The government’s latest measures are designed to deepen India’s integration with global financial markets and attract long-term foreign capital. Analysts say the tax cuts and regulatory easing improve the competitiveness of Indian bonds compared with other emerging-market debt instruments.
The inflows come at a time when policymakers are seeking to strengthen the rupee, reduce borrowing costs and broaden the investor base for government securities.
India’s bond market has gained increasing attention from global investors since its inclusion in major international bond indexes, a move that has encouraged foreign institutions to allocate a larger share of their portfolios to Indian debt.
Market participants believe continued policy support and stable macroeconomic conditions could sustain foreign interest in Indian bonds in the months ahead, further enhancing the country’s appeal as an investment destination.
