India launches bond market reforms and plans further steps to lure foreign investment

Finance Minister Nirmala Sitharaman said the measures announced by the Reserve Bank of India and the government are only the first step to attract foreign capital. The reforms expand the Fully Accessible Route for government securities, include new issuances in G‑Secs and grant income‑tax exemption on interest and capital gains for foreign portfolio investors. The RBI also opened a swap facility for banks to manage foreign‑currency deposits and a forex‑swap facility for public‑sector undertakings to raise external commercial borrowings, with currency hedging costs borne by the central bank.

Sitharaman warned that India faces "severe strain" from imports of crude oil, fertilisers and other raw materials and highlighted the need for adequate foreign‑exchange reserves. She indicated that more policy steps will follow to further increase foreign direct investment and to stabilise the rupee, while noting challenges such as higher crude prices, insurance costs and shipping risks through the Strait of Hormuz.