Recent policy measures announced by the Government of India and the Reserve Bank of India are expected to attract nearly $70 billion in foreign capital inflows, according to discussions held during a meeting of the Economic Advisory Council to the Prime Minister (EAC-PM) chaired by Prime Minister Narendra Modi on Saturday. The meeting focused on India’s economic transformation, long-term development priorities, and strategies to strengthen investment and growth prospects.

The anticipated inflows are linked to a series of reforms aimed at making India a more attractive destination for global investors. On Friday, the Ministry of Finance announced the removal of taxes on long-term and short-term capital gains as well as the withholding tax applicable to foreign institutional investors (FIIs) investing in government bonds. These measures are expected to improve investor sentiment and enhance participation in India's financial markets.

At the same time, the Reserve Bank of India introduced steps to ease access to overseas capital. The central bank made it easier for banks to mobilize foreign deposits and simplified conditions for public sector undertakings to raise funds through external commercial borrowings. Policymakers believe these changes will strengthen capital inflows while supporting economic expansion and infrastructure development.

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A significant portion of the projected foreign investment is dependent on the inclusion of Indian government bonds in the Bloomberg Global Aggregate Bond Index. Such inclusion is considered important because many international investment funds allocate capital based on the weight of countries represented in major global bond indices. Entry into the index could therefore trigger substantial passive investment flows into India’s debt market.

Economists note that higher foreign participation in government securities can help reduce borrowing costs for the Centre. Increased demand for government bonds generally lowers yields, enabling the government to raise funds at more competitive interest rates. This could provide greater fiscal flexibility while supporting long-term development and public investment programs.

Following the meeting, Prime Minister Narendra Modi said discussions covered a broad range of issues related to India’s economic progress and reform agenda. In a message shared on social media, he stated that participants exchanged views on accelerating reforms and improving both “Ease of Living” and “Ease of Doing Business.” The deliberations highlighted the government's continued focus on attracting investment, strengthening economic fundamentals, and sustaining long-term growth momentum.

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