New Delhi – India's Finance Minister Nirmala Sitharaman has underscored the nation's commitment to attracting greater foreign capital, signaling that more policy measures are on the horizon. Speaking at the Mindmine Summit 2026, Sitharaman stated that recent reforms aimed at overseas investors are just the initial steps in a broader strategy to draw global funds into the Indian economy.
Recent Policy Initiatives
The government has already implemented several significant changes to make India more appealing to foreign investors. A key reform includes offering favorable withholding tax treatment, initially focused on the bond market. This move, according to Sitharaman, is a foundational element in encouraging foreign capital inflows.
Earlier this month, the government waived capital gains taxes for foreign investors on government securities and eliminated the withholding tax on their interest income. Additionally, the Fully Accessible Route (FAR) was expanded to include new issuances of 15-year, 30-year, and 40-year government bonds, making them eligible for index inclusion.
Investment limits under the General Route for government bonds were also removed, maintaining only an overall 6% cap on holdings of a specific bond. Concurrently, the Reserve Bank of India (RBI) introduced a facility to cover the full hedging costs for banks raising fresh three- to five-year FCNR(B) deposits until September 30. This mechanism, previously utilized in 2013, aims to bolster foreign currency inflows.
Navigating Global Economic Headwinds
Sitharaman highlighted the necessity for policymakers to remain agile and prepared for the rapidly evolving global economic landscape. She acknowledged that while some challenges are addressed, new ones consistently emerge, requiring constant vigilance.
The Finance Minister also noted the substantial pressure on the Indian economy from imports of critical raw materials, crude oil, and fertilizers, exacerbated by sharp fluctuations in global prices. Maintaining adequate foreign exchange reserves is crucial to meet the growing demands of a developing economy, she emphasized.
These strategic moves reflect India's calibrated approach to ensure robust market investment and sustain economic growth amidst an unpredictable international environment.