Foreign portfolio investors (FPIs) have invested a record ₹39,640 crore in Indian government securities (G-Secs) in June so far, marking the highest-ever monthly inflow into the country’s sovereign debt market. The surge follows a series of policy measures by the Government of India and the Reserve Bank of India (RBI), including capital gains tax exemptions on eligible sovereign debt investments and an expanded list of securities under the Fully Accessible Route (FAR). These reforms have boosted investor confidence, strengthened expectations of India’s inclusion in Bloomberg’s Global Aggregate Bond Index, and supported the rupee and bond market, although experts caution that elevated US Treasury yields could temper future inflows.
Record FPI Investment in June
Indicator
Details
FPI investment in Indian G-Secs (June 2026 so far)
₹39,640 crore (about $4.2 billion)
Previous monthly record
₹22,005 crore (August 2024)
Growth driver
Tax exemptions and expanded FAR access
Key Policy Measures Behind the Surge
Measure
Impact
Capital gains tax exemption on eligible sovereign debt
Improved returns for foreign investors
Expansion of Fully Accessible Route (FAR) securities
Broader investment opportunities, including 30-year government bonds
Regulatory support from RBI and Government
Increased foreign participation in the bond market
Why Investors Are Buying Indian Bonds
Factor
Significance
Prospects of Bloomberg Global Aggregate Bond Index inclusion
Expected to attract long-term passive foreign investments
Reduced concerns over rupee depreciation
Improved confidence among overseas investors
Better access to sovereign debt
Expanded investment universe under FAR
Market Impact
Indicator
Latest Trend
Foreign exchange reserves (June 12)
$672 billion
Rupee movement
Appreciated from a record low of 96.96 per US dollar in late May to 94.40
10-year government bond yield
Declined by 20 basis points to 6.76%
Comparison with Previous Fiscal Year
Period
Net FPI Inflows into FAR Bonds
FY26
₹3,546 crore
June 2026 (so far)
₹39,640 crore
Key Risks to Watch
Challenge
Potential Impact
Elevated US Treasury yields
May reduce the relative attractiveness of Indian government bonds
Global geopolitical uncertainties
Could affect the pace of future foreign inflows despite supportive domestic policies
