Finance Minister Sitharaman Signals More Policy Steps to Attract Foreign Capital Into India

Key Takeaways

• On 15th June 2026, Finance Minister Nirmala Sitharaman mentioned in an interaction at the Mindmine Summit, New Delhi, that further measures will be adopted to lure foreign capital, and the tax relief offered on bonds was just the “first step”.
   
• On 5th June 2026, capital gains and interest tax on govt securities were waived for FPIs. This will substitute a long-term capital gains tax at 12.5% and a short-term tax at 30% before this change.

What was revealed by Sitharaman at the Mindmine summit on 15th June?

Finance Minister Nirmala Sitharaman informed a group of businessmen in New Delhi on June 15, 2026, that the nation will have more initiatives to bring in more foreign funds. 

She stated at the Hero Mindmine summit, hosted by Hero Enterprises, that the policy adopted to make bonds appealing for FPIs on June 5th was not the ultimate action. There will be more to come to induce the inflow of foreign investment, which is a necessity due to the outflow of funds estimated at nearly 2.5 lakh crore from Indian equity so far this year. It makes it one of the worst in recent times.

“Although at the moment it’s confined to the bond market, certainly that’s not the end of the story. There will be more. We recognise we need more foreign capital to come in,” she noted.

What is the impact on Indians of these policies?

Interest and capital gains income earned by Foreign Portfolio Investors from government bonds were made tax-free from April 1, 2026. Earlier on, foreign bond funds were charged a 12.5% long-term capital gain tax, along with a 20% tax withheld from interest. That made Indian bonds less competitive globally.

Rajesh H Gandhi, partner at Deloitte India, said this change raises FPI returns from Indian government bonds by 15 to 20%. That gap matters. A better return pulls money in. More foreign money means more dollar supply, which holds the rupee steady. 

India imports 87% of its crude oil, per government data cited by News9Live. A stable rupee keeps fuel and goods cheaper, which controls inflation and reduces pressure on interest rates. That is good news for home loan and personal loan borrowers.

What are Experts Saying? Is it working?

It is already working, at least on paper. After June 5, FPIs put ₹8,794 crore into government bonds under the Fully Accessible Route in just one week. Holdings in FAR securities went from ₹3.23 trillion on June 3 to ₹3.32 trillion by June 9, 2026, according to Clearing Corporation of India Ltd data.

Mataprasad Pandey, vice-president at Arete Capital, said, “We can see the optimism from FPIs who nearly invested 75% of net G-sec purchases in FAR bonds recorded during April and May. It also strengthens India’s case for inclusion in major global bond indices, such as Bloomberg’s sovereign bond index, whose inclusion decision was deferred earlier this year.”

Nehal Sampat, partner at Price Waterhouse and Co LLP, said removing the tax friction could also push India's case for inclusion in global bond indices further. That, if it happens, would bring in a much larger and more sustained wave of inflows.

Sitharaman also flagged risks. A weak monsoon, disrupted fertiliser supply, and high crude oil import costs remain concerns. She said the government is ready for any sudden shocks.

Conclusion

The June 5 tax exemption has already brought in ₹8,794 crore in FPI debt money within a week. Sitharaman has said this is not the end. More policy moves are coming. The chain reaction is more foreign inflows, a steadier rupee, lower inflation, and less upward pressure on lending rates for Indian borrowers.

FAQs

Were any new tax laws introduced for FPIs by Finance Minister Sitharaman?

Yes. On June 5, 2026, the government removed capital gains tax and interest income tax for FPIs investing in Indian government bonds. This is effective from April 1, 2026. It replaces a 12.5% long-term tax and 20% withholding tax that applied earlier.

Will India open more government bonds to foreign investors beyond the bond market?

Sitharaman said on June 15, 2026, that the bond market reforms are only the first step. More measures to attract foreign capital are being planned. She did not give a date, but confirmed the government is actively working on broader steps beyond government securities.