India has moved to further strengthen its government bond market by extending tax benefits available to foreign investors investing in government securities (G-Secs).
The decision is aimed at attracting more global capital into India’s debt market at a time when international investor interest in Indian bonds has been rising following their inclusion in major global bond indices.
Under the extension, eligible foreign investors will continue to receive tax exemptions on certain income earned from investments in government securities. The measure is expected to improve the attractiveness of Indian bonds relative to competing emerging-market debt instruments.
Government securities are considered among the safest investment instruments in India because they are backed by the sovereign. Increased foreign participation can improve liquidity, lower borrowing costs and enhance the depth of the domestic bond market.
The move comes as India seeks to integrate more closely with global financial markets. The country’s inclusion in global bond indices has already triggered significant foreign inflows, with international funds increasing their exposure to Indian debt assets.
Market participants believe the continuation of tax incentives will provide additional confidence to overseas investors and support sustained capital inflows into the government securities market.
The policy is also expected to help the government manage its borrowing programme more efficiently while broadening the investor base for sovereign debt.
Overall, the extension reinforces India’s strategy of making its bond market more accessible and competitive for global investors, supporting long-term capital inflows and financial market development.
