Vipin Upadhyay Discusses Proposed Bond Market Tax Reforms and Their Impact on Foreign Investment in Business Standard
Vipin Upadhyay was recently featured in Business Standard discussing the Government’s proposed tax reforms aimed at enhancing the attractiveness of India’s bond market for foreign investors.
The article examines the anticipated policy changes designed to encourage greater foreign participation in government securities and deepen India’s debt markets at a time when the country is increasingly integrated into global financial indices.
Commenting on the proposed exemption of capital gains tax on Foreign Portfolio Investor (FPI) holdings in government securities, Vipin noted that the measure addresses one of the longest-standing concerns raised by international investors. He observed that India has historically remained among the few major jurisdictions that imposed capital gains tax on non-resident investments in sovereign debt, creating a competitive disadvantage when compared with other emerging markets.
According to Vipin, removing this tax burden has the potential to improve post-tax yields for foreign investors, making Indian Government Securities (G-Secs) structurally more attractive relative to comparable investment destinations. He further noted that increased foreign participation could contribute to the long-term development of India’s bond market, which continues to be predominantly driven by domestic banking institutions.
At the same time, Vipin emphasized that the effectiveness and scope of the reform will ultimately depend on the final contours of the ordinance and subsequent notifications. He highlighted key areas that market participants will closely monitor, including whether the exemption extends to withholding tax on interest income and how eligible investors and securities are defined under the framework.
Last Updated on 9 June, 2026
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