India Draws $1.84 Billion in Foreign Bond Inflows in June - Best Month in Over a Year

India's foreign bond inflows surged to $1.84 billion in June, the strongest month for debt purchases in 16 months. Over five trading sessions this month, overseas buyers returned to Indian government securities, reversing a year-long retreat. The rise followed June 6 policy changes that scrapped capital gains taxes on FII investments in government bonds and eliminated the withholding tax on interest. RBI measures, including expanding the Fully Accessible Route and introducing forex swap facilities, complemented the tax changes and supported demand. The rupee strengthened about 1% since the announcement, and yields fell across tenors, with the 10-year benchmark down roughly 13 basis points in June. Analysts say the tax relief and policy clarity improve India's appeal to foreign buyers and could help re-rate the debt market. Despite the rally, FIIs remain below the ceiling, suggesting substantial headroom for further participation. Analysts also see potential for India's inclusion in major fixed-income benchmarks if momentum continues, and June's policy momentum could bring that possibility within reach in the medium term.