• FCNR deposit relief: RBI absorbing hedging costs offers a strong tax-free arbitrage incentive for the estimated 3–4 crore NRIs to channel greater foreign inflows into India.
• Bond taxation benefits: Removing the 20% withholding tax on bond interest eliminates major compliance friction and enhances post-tax returns for FPIs operating out of treaty jurisdictions like Singapore and Dubai.
• Global index outlook: Potential inclusion in the FTSE Russell World Government Bond Index and the Bloomberg Global Aggregate index (under review with an expected 0.7% weight) is projected to attract major foreign bond inflows and strengthen the rupee.
• RBI policy assessment: The policy is considered very positive amid rupee pressures, maintaining a 6.9% GDP growth estimate and an FY27 inflation target of 4.6% alongside FAR expansions and ECB swap discounts.
• Market sentiment resilience: Despite heightened fear across social media and news outlets, the broader market remains resilient against geopolitical tensions, with Nifty down 8% and model mutual fund portfolios down only 2.5% post-war.