India implements measures to boost dollar inflows
The Reserve Bank of India and the government have introduced tax exemptions for foreign bond investors and incentives for non-resident deposits to stabilize the external balance of payments. These steps aim to attract up to 50 billion dollars as the rupee faces pressure from high oil prices.
The Reserve Bank of India (RBI) implemented tax exemptions and capital controls on Friday to attract $30 billion to $50 billion in inflows. These measures aim to stabilize the rupee after the currency hit record lows against the dollar. High energy costs and foreign equity selling have pressured the national balance of payments, necessitating immediate intervention to cool dollar outflows.
### Tax Breaks to Lure Bond Investors The Indian government removed a 12.5% capital gains tax and a 20% interest earnings tax for foreign bond investors on Friday. These exemptions take effect April 1, 2026, and apply to a wider pool of government bonds now free of investment limits. The Bank for International Settlements is also exempt from these taxes to encourage its participation in the local debt market.
