Reserve Bank of India logo at its headquarters in Mumbai
The Reserve Bank of India (RBI) on Friday unveiled a set of measures aimed at attracting greater foreign participation in India’s equity and debt markets, including higher investment limits for overseas investors in listed shares, wider access to government securities and relaxation of investment restrictions for foreign portfolio investors (FPIs).Improve situationThe measures are expected to support capital inflows, improve liquidity in domestic financial markets and strengthen demand for government bonds amid an uncertain global environment. On the equity side, the RBI increased the limits for investments by NRIs and Overseas Citizens of India (OCIs) in listed equity instruments without requiring registration with the Securities and Exchange Board of India (SEBI). The facility has also been extended to all individual Persons Resident Outside India (PROIs), broadening the pool of overseas investors that can access Indian markets.In the debt market, the central bank expanded the universe of securities available under the fully accessible route (FAR) by including all new issuances of 15-year, 30-year and 40-year government securities. The FAR framework allows non-residents to invest in specified government securities without investment limits.The RBI also withdrew limits relating to short-term investments by FPIs under the general route, a move expected to make participation in the government bond market more flexible.The measures come alongside the Centre’s decision to exempt foreign institutional investors (FIIs) and the Bank for International Settlements (BIS) from capital gains tax on income earned from investments in government securities with effect from April 1.Market participants said the tax relief, coupled with wider market access, could improve the attractiveness of Indian sovereign debt for overseas investors.Dhiraj Relli, MD & CEO at HDFC Securities, said the liberalisation of investment norms for overseas investors “strengthens India’s capital account at a time when external financing conditions remain dynamic, while also supporting rupee stability”.The move could deepen foreign participation, improve liquidity and strengthen long-term capital inflows into Indian equities, said Saurabh Jain, Head of Fundamental Research at SMC Global Securities.“The decision also aligns with India’s broader goal of becoming a global financial hub through initiatives like GIFT City. Increased participation from the Indian diaspora and overseas investors could support market depth, corporate fundraising and financial market globalisation over the medium term,” he said.The debt market measures also drew a positive response from fixed-income participants. Kaustubh Gupta, CIO – Fixed Income, Aditya Birla Sun Life AMC, said the expansion of FAR and removal of investment restrictions under the general route “should enhance foreign participation in government securities and support the government borrowing programme”.Ankita Pathak, Head – Global Investments at Ionic Asset, said the combination of FAR expansion, relaxation of investment limits and removal of taxes on interest income and capital gains for foreign investors in government securities “significantly improves the attractiveness of Indian debt markets”. The measures, she added, are expected to boost foreign participation in government bonds, support softer bond yields and stabilise the rupee.Published on June 5, 2026
