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India Explores Tax Cuts on Foreign Bond Holdings to Bolster Capital Inflows

India is considering lowering taxes on foreign investor holdings of bonds as policymakers move to harmonize regulations with international standards and stimulate capital inflows, according to people with knowledge of the matter.

The initiative comes as India's central bank explores mechanisms to stabilize the rupee, including potential sales of foreign-currency bonds through state-owned lenders—a tactic unused for nearly 30 years.

Meanwhile, major Indian corporations are pursuing international funding channels. Shapoorji and Pallonji Group is negotiating high-yield bond sales with global asset managers BlackRock and JPMorgan Chase. Reliance Industries is restructuring its Jio Platforms IPO to include only new share issuances, minimizing overseas capital outflows. Additionally, Adani Power plans to raise 80 billion rupees through domestic debt markets this year for expansion projects.