India just made its bond market a lot more hospitable for overseas money. And overseas money noticed.
After the Indian government scrapped taxes on foreign portfolio investors holding government securities, June 2026 recorded net inflows of approximately $1.84 billion (around 35,000 crore rupees) into Indian bonds. That’s the highest monthly figure in 16 months.
What India actually changed
The policy overhaul, announced via ordinance in early June, eliminated two taxes that had long been a drag on foreign appetite for Indian debt.
First, the 12.5% long-term capital gains tax on government securities, gone. Second, the 20% withholding tax on interest income for eligible foreign investors, also gone. Both exemptions were applied retroactively from April 1, 2026, meaning investors who had already parked money in Indian bonds this fiscal year got the benefit too.
