सत्याधीशसत्याधीश
SatyaDheesh
India's Ground Truth Record
Pull to refresh
VOL. I · EST. 11.2025 
SatyaDheesh
सत्याधीश
India's Ground Truth Record
LIVE

India makes big moves to attract foreign investments in bonds: How will this impact stock market?

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·

Why in news

The Indian government and RBI introduced measures to attract foreign capital by removing capital gains tax on FII investments in government securities and expanding the Fully Accessible Route (FAR).

Background

The government removed capital gains tax on FII investments in government securities and exempted them from tax on interest income and capital gains. The RBI expanded the Fully Accessible Route (FAR) for government bonds and raised investment limits for NRIs and OCIs in listed equity instruments.

Facts for Prelims

  • FactFIIs: Foreign Institutional Investors are exempted from capital gains tax on government securities investments.
  • BodyRBI: The Reserve Bank of India expanded the Fully Accessible Route (FAR) for government bonds.
  • FactNRIs and OCIs: Investment limits for these categories in listed equity instruments have been raised.

For Mains

Q. Analyze how fiscal incentives and regulatory relaxations for foreign portfolio investments can influence India's capital market depth and liquidity.

Dimensions to cover in your answer

  • Market volatility: Potential for short-term liquidity surges vs. long-term capital flight risks
  • Monetary friction: Balancing capital inflow incentives against the RBI's hawkish policy stance
  • Market depth: Impact of increased FII participation on the stability of government securities

Keywords: Capital Gains Tax · Foreign Institutional Investors · Fully Accessible Route · Market Liquidity · Capital Inflow

Read the full news →Report a mistake in this noteSource: Economic Times ↗

More Economy notes

All Economy current affairs →

Something wrong, or something missing?

Spotted a mistake in a note, or want a topic, format or PDF that would help your preparation? Write to us. We read every mail and fix errors fast.

Report a mistake →Ask for something →[email protected]

This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.