Government announces Measures to Deepen the G-Sec market and Facilitate greater FPI

Current Context: On June 5, 2026, the Ministry of Finance announced major reforms to deepen the G‑Sec market and boost Foreign Portfolio Investment (FPI).

• Aim → Attract stable long‑term foreign capital, simplify processes, improve liquidity, and strengthen India’s global investment position.
• Tax Exemption: FPIs/FIIs fully exempted from income tax on interest income & capital gains from G‑Secs (effective April 1, 2026); extended to Bank for International Settlements (BIS).
• Expansion of FAR: New 15‑yr, 30‑yr, 40‑yr G‑Secs and Sovereign Green Bonds (SGrBs) included under the Fully Accessible Route.
• Relaxations under General Route: Removal of short‑term, concentration, and security‑wise limits; merger of ‘General’ & ‘Long‑Term’ categories into one.
• Caps Retained: 6% of outstanding Central G‑Secs and 2% of State G‑Secs (SGSs).
• Significance → Supports a smoother yield curve, enhances market liquidity, and positions India as a global investment hub.

Question:

Q.1 The tax benefits extended to FPIs and FIIs under the June 2026 reforms were also granted to which international financial institution?
a) International Monetary Fund (IMF)
b) World Bank
c) Asian Infrastructure Investment Bank (AIIB)
d) Bank for International Settlements (BIS)

Answer: d) The Bank for International Settlements (BIS) was specifically included within the scope of these tax exemptions.