India Keeps Foreign Debt Investment Limits Unchanged

The central bank of India has announced that foreign debt investment limits will remain unchanged for the 2026-27 fiscal year. This decision follows observations that foreign portfolio investors are currently holding fewer government bonds than the maximum permitted levels. Although the percentage-based caps are staying the same, the Reserve Bank of India, which revises these limits annually, indicated that the absolute value of these investment ceilings will rise as the total volume of outstanding government debt increases.

Under the framework for 2026-27, investment limits for foreign portfolio investors are set at 6% for government securities, 2% for state government securities, and 15% for corporate bonds. Specifically, the total investment limit for government securities has been adjusted to 3.04 trillion rupees for the October-March half of the fiscal year.

Regarding Credit Default Swaps, the aggregate notional limit for those sold by foreign investors is fixed at 5% of the total outstanding stock of corporate bonds, with an additional allocation of 3.30 trillion rupees for the 2026-27 period. Additionally, the central bank confirmed that all existing and new investments under the Voluntary Retention Route will be brought into alignment with general route limits effective April 1.