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India Weighs Tax Cuts on Foreign Bond Holdings to Stabilize Rupee

India is considering reducing taxes on foreign investor bond purchases to strengthen the rupee and align fiscal policy with international standards. The tax cut would lower levies paid by overseas holders of Indian sovereign debt, potentially attracting increased capital inflows during a period of currency pressure. Separately, India's central bank is evaluating a strategy for state-owned lenders to issue foreign-currency bonds—a tactic not deployed in nearly three decades—to draw additional foreign capital and support the rupee. The dual approach reflects mounting concern over capital outflows and currency weakness amid volatile global conditions. Officials believe harmonizing tax treatment with peer nations could enhance India's competitiveness as a destination for foreign investment and help stabilize the rupee amid external headwinds.