The Reserve Bank of India (RBI) has notified the Foreign Portfolio Investment (FPI) limits in debt instruments for FY 2025–26, keeping investment ceilings unchanged for key segments. These limits are set under the Foreign Exchange Management Act (FEMA), 1999. They aim to regulate foreign investments in India’s debt market while ensuring financial stability and gradual capital account liberalization.
FPI Investment Limits (Unchanged)
| Instrument Type | Limit (as % of Outstanding Stock) |
| Government Securities (G-Secs) | 6% |
| State Government Securities (SGSs) | 2% |
| Corporate Bonds | 15% |
Implementation & Category-wise Allocation
- G-Sec Limit: Incremental limit split equally between:
- General sub-category
- Long-term sub-category
- SGS Limit: Entire incremental limit allocated to the General sub-category.
- Limits to be implemented in two phases:
April–September 2025:
- G-Secs: ₹2.79 trillion (~$32.71 billion)
- Corporate Bonds: ₹8.22 trillion
October–March 2026
- G-Secs: ₹2.89 trillion
- Corporate Bonds: ₹8.80 trillion
Utilisation by FPIs (as of April 2025)
- Government Bonds: 22.3% of the limit used
- Corporate Bonds: 15.7% of the limit used
Investment Route & Additional Guidelines
Fully Accessible Route (FAR):
- Continues to govern FPI investments in specified securities.
Credit Default Swaps (CDS):
- FPIs allowed to sell CDS up to 5% of total outstanding corporate bond stock.
- For FY 2025–26, this translates to ₹2,93,612 crore.
Authorized Dealer (AD) Category-I Banks:
- Directed to inform clients about the revised FPI limits.
Significance
- These limits guide capital inflow, influence bond yields, and are part of India’s overall foreign investment policy.
- Stable limits reduce market volatility and send a confidence signal to global investors.
- The move ensures continuity and market stability and allows foreign investors to plan their bond investments better with clear limits.
- It also signals that India is not making major changes in its debt access policies for foreign entities this fiscal.