Context:
Government announced measures to attract Foreign Portfolio Investment, deepen the Government Securities market, strengthen the rupee and improve the Balance of Payments.
Basics
FPI:
Foreign investment in shares, bonds and securities without management control.
G-Sec:
Government borrowing instrument.
Treasury Bills:
91 days, 182 days and 364 days.
Dated G-Secs:
1–40 years.
FAR — Fully Accessible Route:
Selected G-Secs fully open to foreign investors.
PROI — Persons Resident Outside India:
Overseas individuals / entities eligible to invest in India.
Interest Income:
Coupon / interest earned from holding G-Secs.
Capital Gain:
Profit from selling G-Secs above purchase price.
STCG — Short-Term Capital Gain:
Less than or equal to 12 months.
LTCG — Long-Term Capital Gain:
More than 12 months.
Core Measures
Tax Relief
Earlier:
- Interest Tax: around 20%
- STCG: 30%
- LTCG: 12.5%
Now, from 1 April 2026:
- Interest Tax: Nil
- STCG: Nil
- LTCG: Nil
FAR Expanded
- 15-year G-Secs
- 30-year G-Secs
- 40-year G-Secs
- Sovereign Green Bonds
Restrictions Removed
- Short-term limit
- Concentration limit
- Security-wise limit
FPI Cap Retained
- 6% of Central Government Securities
- 2% of State Government Securities
PROI Limit
- Individual limit increased from 5% to 10%
- Overall limit increased from 10% to 24%
