India eyes major bond index entry as tax exemptions sweeten appeal
GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims + Mains·
Why in news
The RBI and Finance Ministry are seeking to engage with the Bank for International Settlements (BIS) to facilitate India's reapplication for inclusion in major global bond indices.
Background
India aims to attract $7-11 billion in foreign investment through bond index inclusion. The government has introduced significant tax exemptions for foreign investors and expanded the pool of long-dated securities.
Facts for Prelims
- BodyBIS: Bank for International Settlements
- FactTargeted foreign investment from bond index inclusion: $7-11 billion
- FactPolicy measures include tax exemptions for foreign investors and expanded long-dated securities pools
For Mains
Q. Discuss the significance of inclusion in global bond indices for India's capital markets and the role of fiscal incentives in attracting Foreign Portfolio Investment (FPI).
Dimensions to cover in your answer
- Liquidity management: Reducing reliance on domestic savings by tapping into global capital pools
- Regulatory alignment: Harmonizing settlement and trade oversight with international index operator standards
Keywords: Foreign Portfolio Investment · Capital Market Integration · Fiscal Incentives · Bond Index Inclusion · Liquidity Management
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