A couple of weeks ago, many were calling the FPI tax exemption on G-Secs a giveaway.
Since then, FPIs have bought roughly ₹33,000 crore worth of government bonds, and the 10-year G-Sec yield has fallen from 6.98% to 6.84%. Lower bond yields mean the government can borrow at a lower cost. If sustained, it can also ease funding costs across the financial system.
What stands out is how predictable the reaction was. Remove a tax friction, improve post-tax returns, and more capital shows up.
Too early to call it a long-term success, but the market’s initial verdict has been pretty clear.