India Opens Wider to Global Investors as RBI Moves to Strengthen Currency Stability

The Reserve Bank of India (RBI) has announced a series of policy measures aimed at attracting stronger foreign capital inflows and stabilising the Indian rupee amid global financial volatility and sustained foreign investor outflows.

The central bank’s latest package focuses on making India’s debt and equity markets more accessible and attractive to overseas investors. Key steps include expanding the Fully Accessible Route (FAR) to include long-term government securities such as 15-year, 30-year, and 40-year bonds, thereby opening deeper participation in India’s sovereign debt market. Investment restrictions for foreign investors have also been eased, including removal of concentration limits and broader access for non-resident individuals.

In addition, the RBI has taken steps to improve returns and reduce costs for foreign investors. This includes tax exemptions on capital gains for foreign institutional investors in government securities, concessional foreign exchange swap arrangements, and full hedging cost support for banks raising FCNR(B) deposits to encourage more dollar-denominated inflows. The export realisation period has also been extended, providing more flexibility to exporters.

These measures come at a time when India has been experiencing pressure on its currency due to global uncertainties, high crude oil prices, and significant foreign portfolio outflows. By improving investor incentives and easing market access, the RBI aims to strengthen forex reserves, support rupee stability, and maintain confidence in India’s financial system.

Overall, the package reflects a clear strategy to balance external pressures while ensuring continued foreign participation in India’s growing economy.