Nirmala Sitharaman hints at more measures to boost foreign investment inflows

Finance Minister Nirmala Sitharaman on Monday indicated that the government could take additional measures to attract foreign capital into the Indian market.

Speaking at the Hero Mindmine Summit 2026, Sitharaman said the government’s decision to exempt withholding tax on interest and capital gains tax earned by foreign investors in government securities (G-secs) was the first step towards bringing foreign capital back into the market.

“Certainly, that’s not the end of story, there will be more. We recognise we need more foreign capital to come in,” Sitharaman said.

The Reserve Bank of India (RBI) on June 5 allowed banks to access the RBI’s swap facility for Foreign Currency Non-Resident (Bank) (FCNR(B)) deposits with maturities of three to five years until September 30. The facility enables banks to swap US dollar deposits with the RBI and manage currency risks.

Another measure aimed at supporting foreign capital inflows is a concessional forex swap facility to encourage public sector undertakings (PSUs) to raise external commercial borrowings (ECBs) until September 30.

Sitharaman said that under the framework announced by the RBI, the cost of currency hedging would be borne by the central bank.

“And as a result, the banks can now go unfettered, to raise their own fund. So we have taken a very calibrated approach to make sure that the markets do see the required investments,” Sitharaman said.

The Finance Minister also said the Indian economy is facing “severe strain” from imports of key raw materials, crude oil and fertilisers.

She said the global situation is changing almost every week, with new challenges emerging, and added that the country must remain prepared for every such “exigency”.