The Reserve Bank of India has decided to keep the foreign portfolio investor limit for government securities via the general route unchanged for 2026-27. The RBI set the ceiling at 6% of the outstanding stock of securities, signaling continuity in how foreign flows into G-secs will be managed despite evolving market conditions.
Foreign portfolio investors bought fewer Indian securities in FY26, with outflows increasing as tensions in West Asia escalated. Economists expect muted flows in FY27, citing the ongoing Gulf conflict, a weaker rupee, and worries about government finances. A major catalyst such as bond index inclusion may be needed to restart stronger inflows.
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