RBI measures may draw foreign investments worth $50-60B in India
What's the story
ICICI Securities has projected that India could see an influx of $50-60 billion in foreign investments in the coming months. The prediction comes after the Reserve Bank of India (RBI) announced a series of measures aimed at attracting foreign capital. The steps include allowing eligible foreign investors to invest in long-term government bonds through the Fully Accessible Route (FAR), which imposes no restrictions on investment limits.
Policy changes
RBI's measures to attract foreign capital
Along with the FAR, the RBI has also eased some restrictions for foreign portfolio investors (FPIs) and raised investment caps for non-resident investors in equities. The central bank has introduced measures to promote external commercial borrowings (ECBs) and foreign currency deposits. B Prasanna, Head of Investment Banking & Institutional Equities at ICICI Securities, described these steps as a "bazooka" of sorts to attract foreign capital.
Economic impact
India's vulnerability to West Asia conflict
As a net crude oil importer, India relies on foreign countries for nearly 90% of its oil supply. This dependency has made the Indian economy extremely vulnerable to the ongoing conflict in West Asia. So far this year, foreign investors have pulled out nearly $28 billion across various asset classes including equities and bonds. The net outflow in January-May 2026 has already surpassed the total withdrawal for all of 2025.
Stabilization efforts
Emergency measures to stabilize rupee
The massive outflow has forced both the government and the central bank to take emergency measures to stabilize the rupee by attracting new foreign investments. Prasanna believes that removing tax on select government bond investments could strengthen India's case for inclusion in major aggregate bond indices. This could potentially bring an additional $20-25 billion in passive inflows during the next fiscal year.
Investment trends
Potential increase in allocations from Asia-based investors
Despite a decline in foreign ownership of India's large-cap stocks, the number of stocks owned by FPIs has increased significantly over the past six years. Manoj Menon, Head of Research, Institutional Equities at ICICI Securities, said many Asia-based investors who are currently underweight in India are looking to increase their allocation in the coming quarters. These investments will likely be directed toward cyclical sectors such as power, defense, metals and large banks.