Now Reading: SBI Funds: foreign bond flows may stay muted despite tax relief
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SBI Funds: foreign bond flows may stay muted despite tax relief
SBI Funds: foreign bond flows may stay muted despite tax relief
SBI Funds Management has warned that foreign investment into Indian government bonds will likely stay subdued even after taxes on overseas sovereign bond purchases were removed. In its August 2026 market outlook,…
The Story in Brief
SBI Funds Management has warned that foreign investment into Indian government bonds will likely stay subdued even after taxes on overseas sovereign bond purchases were removed. In its August 2026 market outlook, SBI Funds said the deferment of India’s inclusion in a global bond index could also limit fresh foreign portfolio investment.
The fund house added that global yields, the domestic interest rate cycle, and rupee expectations offer little comfort for debt flows. It expects the RBI to stay on an extended pause on interest rates. Any tactical flows, it said, would be guided by currency expectations rather than by the tax relief.
The Indian Opinion
The SBI Funds report punctures the idea that tax relief alone will lure foreign money into Indian bonds. Market narratives often blame government policy for low FPI inflows, but this analysis correctly points to global yields and the RBI’s extended rate pause. The real test will be whether the RBI eventually normalises rates or if global fiscal conditions ease. Until then, the rupee’s direction matters more than any tax tweak.
Source: thehindubusinessline.com
This story was synthesised by AI from the source linked above.
