Nirmala Sitharaman, the Union Finance Minister of India, announced that the government plans to create new policy measures to increase foreign capital inflow into our country. This is part of the government’s continued efforts to attract worldwide investments and improve India’s investment climate. Foreign capital, including both direct and portfolio investments, is very important to India’s economic growth and development of infrastructure and to maintaining the stability of India’s financial markets.
According to Ms. Sitharaman, the government is looking to take further measures to help investors make the process of investing easier and more attractive to investors outside of India. There were no specific details provided, however, this announcement supports that we will continue to implement reforms intended to maintain capital inflows in light of the continual change in the global economy.
During the Mindmine Summit 2026, India's Union Minister for Finance, Nirmala Sitharaman, stated that India recognizes the need for additional foreign investments and is working towards making it easier for financial institutions to reach global financial markets. The RBI has provided guidelines for Public Sector Enterprises and Banks to raise funding from abroad.
The primary benefit of this process is that the Reserve Bank of India will bear the costs associated with hedging foreign currency fluctuations, which eliminates the exposure of currency-related risk on the originating party and increases the ability of these institutions to raise capital "freely" and "without restrictions" in the global markets.
RBI Measures to Encourage Foreign Currency Deposits
RBI has put in a foreign exchange swap mechanism as a part of continuing efforts into motivating banks to increase their FCNR(B) deposit interest rates, thereby boosting Foreign Currency Deposits for overseas investors.
Under this scheme, to make it easier for banks to lend out their FCNR(B) deposits, the RBI has agreed to cover all hedging costs associated with deposits with a maturity of between three and five years and to exempt all new deposits from the requirement of reserves. Since this program was announced, many banks have raised their FCNR(B) deposit interest rates making foreign currency deposits very attractive to foreign investors.
Calibrated Approach to Ensure Steady Investment Flows
These actions are part of a larger set of similar and coordinated measures to support high levels of investment into Indian markets while maintaining overall financial stability, as stated by Nirmala Sitharaman, Finance Minister of India.
She added that this policy will be a very deliberate attempt at finding a way to provide sufficient foreign investment capital to Indian markets without disrupting the stability of those financial markets, this will allow for the continued receipt of foreign capital, which is needed to support ongoing growth in the Indian economy.
Tax Incentives and Further Policy Direction
Sitharaman further stressed the importance of the concessional withholding tax for attracting investments to India through capital repatriation from abroad. The favourable tax treatment provided to overseas investors is extensive in an effort to encourage the return of capital and additional capital inflows to India.
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