The Fully Accessible Route (FAR) is a special channel through which non-resident investors can invest in selected Government of India securities without any investment limit. It was introduced by the Reserve Bank of India in 2020 to deepen India’s government securities market and increase foreign participation in Indian bonds.
FAR is important because it created the basis for the inclusion of Indian government bonds in global bond indices such as the JP Morgan Government Bond Index-Emerging Markets (GBI-EM).
Meaning and Structure
Under the normal foreign portfolio investment route, foreign investors face limits on how much they can invest in Indian government securities.
FAR is different.
Under FAR:
- selected Central Government securities are fully open to non-resident investors
- there is no quantitative investment ceiling
- both domestic investors and foreign investors can invest
- eligible securities are notified by the RBI
- securities remain eligible under FAR until maturity once notified
This means that if a government bond is designated under FAR, foreign investors can buy it without being restricted by the usual FPI investment limits.
Why FAR Was Introduced
India introduced FAR to make its government bond market more accessible to global investors.
The idea was to:
- widen the investor base
- improve liquidity in government securities
- support demand for Indian bonds
- prepare Indian bonds for global index inclusion
- reduce dependence on only domestic institutional buyers
Before FAR, foreign participation in Indian government bonds was limited by investment caps. Global bond index providers generally prefer markets where foreign investors can enter and exit more freely. FAR helped address this issue for selected Indian securities.
Link with Global Bond Indices
FAR became especially important after Indian government bonds were included in global bond indices.
In 2023, JP Morgan announced that eligible Indian government bonds under FAR would be included in its Government Bond Index-Emerging Markets from June 2024.
This was significant because index inclusion can bring passive foreign inflows into Indian bonds. Global funds tracking such indices are required to buy eligible Indian securities as part of their portfolio.
India’s inclusion was possible mainly because FAR securities were accessible to foreign investors without investment caps.
Significance
FAR is important for India’s bond market because it improves foreign investor access while keeping the opening limited to selected securities.
Its significance lies in three areas.
First, it deepens the government securities market by bringing in a wider pool of investors.
Second, it can reduce borrowing pressure on domestic investors because foreign funds also participate in government bond demand.
Third, it improves India’s integration with global financial markets through bond index inclusion.
For the government, better demand for G-Secs can support borrowing management. For markets, FAR improves liquidity in selected benchmark securities.
Concerns
FAR also brings certain risks.
Higher foreign participation can make the bond market more exposed to global financial conditions. If global interest rates rise or risk appetite falls, foreign investors may sell emerging-market bonds, creating volatility.
It can also increase sensitivity to:
- US Federal Reserve policy
- global bond yields
- exchange-rate movements
- foreign portfolio flows
- geopolitical risk sentiment
Therefore, FAR gives India better access to global capital, but it also requires stronger macroeconomic stability, credible inflation management and careful public debt management.
Conclusion
The Fully Accessible Route is a special route that allows foreign investors to invest in selected Indian government securities without investment limits.
It was introduced to deepen India’s G-Sec market and support global bond index inclusion.
FAR is important because it connects India’s domestic bond market with global investors, but it also increases the need to manage external volatility and capital-flow risks carefully.
