Foreign portfolio investors (FPIs) recorded a record inflow into India’s bond market in June 2026, crossing ₹55,518 crore, though analysts questioned how sustainable this momentum is.
The upbeat numbers followed several policy measures: earlier in June, the government waived long-term capital gains (LTCG) tax on foreign investment in bonds; subsequently, the RBI and government expanded the Fully Accessible Route (FAR) to include additional long-tenor government securities (15-, 30-, and 40-year) as well as sovereign green bonds.
These reforms aimed to attract long-term institutional investors such as pension funds, insurers, and sovereign wealth funds, thereby improving the stability of capital inflows.
Commentators, however, stressed that tax changes alone may not explain the improvement. Core determinants like policy consistency and the macroeconomic and external environment still drive investor decisions.
Experts cited improved debt-market sentiment from multiple factors: easing geopolitical concerns related to the Strait of Hormuz and improved confidence stemming from recent RBI policy actions.
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