The Indian G-Secs Foreign Portfolio Investor Holdings fall to 6.7 percent

1. Key Trend

• The holdings of the Foreign Portfolio Investor (FPI) in the Indian Government Securities (G-Secs) declined to 6.7 percent of the total outstanding as of September 19, 2025.
• This is a fall of the 7.1 percent mark in March 2025.

2. Reasons for the Decline

• The decline in FPI investment can be explained by a number of factors worldwide and in the domestic setting:

• Reduction in the Yield Spread: The difference between the interest rate of the 10-year Indian and US bonds has narrowed and Indian debts are now less favorable compared to US assets.
• Depreciation Pressure in the Rupee: Fears about depreciating of the Indian rupee may discourage foreign investments.
• Global Caution: This occurs due to the high-tariff of imports by the US combined with geopolitical tensions that have created a risk-averse environment thus creating cautious investment behavior internationally.

3. Background and present Holdings.

• Having reached a low of 6.7 percent, the current holding of 6.7 percent remains considerably more than the 4.6 percent of June 2024 when the bonds of India were added to the JPMorgan Government Bond Index-Emerging Markets (GBI-EM).
• As of September 19, 2025, the absolute value of FPI holds in G-Secs is 302,577 crore.

4. RBI FPI Investment Limits (No change in FY 202526)

• The reserve bank of India (RBI) has retained the FPI investment limits in the Indian debt instruments at the current financial year:

• Government Securities (G-Secs): 6 percent of outstanding stock.
• Securities of the State Government (SGSs): 2% of outstanding stock.
• Corporate Bonds: 15 per cent of stock outstanding.