Business EconomyPosted at: Jun 6 2026 12:44AM


Tax exemption for foreign investors to boost capital inflows, strengthen India's Bond Market: PHDCCI

New Delhi, Jun 5 (UNI) The PHD Chamber of Commerce and Industry (PHDCCI) has hailed the Income-tax (Amendment) Ordinance, 2026 as a major reform that is expected to attract greater foreign investment into Indian Government Securities, deepen the country's bond market and strengthen capital inflows.
The ordinance exempts interest income and capital gains earned by Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) from investments in Government Securities. According to PHDCCI, the move will enhance the attractiveness of Indian sovereign bonds by improving post-tax returns for global investors.
Industry experts believe the tax relief will encourage increased participation by foreign investors under both the Fully Accessible Route (FAR) and the General Route, helping broaden the investor base for government borrowing.
Welcoming the decision, PHDCCI President Rajeev Juneja said the ordinance represents an important milestone in the development of India's debt market.
"The tax exemption has the potential to enhance market depth, improve liquidity and strengthen capital inflows into the country. Increased participation by global investors will support efficient price discovery and help meet government borrowing requirements at competitive costs," Juneja said.
PHDCCI noted that the measure is expected to complement recent efforts to integrate India's bond market with global financial markets. Greater foreign participation could lead to stronger liquidity in the secondary market and improve the overall efficiency of the debt market.
The chamber also highlighted the positive impact on India's external sector. Increased investment in rupee-denominated Government Securities is likely to generate additional foreign exchange inflows, supporting the country's balance of payments position.
Juneja said that if capital inflows exceed current account financing needs, they could help reduce excessive volatility in the rupee and contribute to greater stability in the foreign exchange market.
PHDCCI, however, emphasized that the full benefits of the reform would depend on continued macroeconomic stability, prudent fiscal management and ongoing efforts to improve market access and liquidity.
Commenting on the development, Ranjeet Mehta, CEO and Secretary General of PHDCCI, said the move brings India's sovereign debt market closer to international best practices.
"Greater participation by long-term global investors can significantly improve market liquidity and strengthen foreign exchange inflows, further enhancing India's position in the global financial landscape," Mehta said.
The ordinance is expected to provide a fresh impetus to India's bond market by attracting long-term institutional capital, reinforcing investor confidence and supporting the country's broader economic growth objectives.
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