India’s Department of Economic Affairs is prioritizing foreign capital and corporate bond market development to support economic growth. Joint Secretary Alok Tiwari confirmed plans to simplify foreign investment rules and address liquidity issues in the bond market. These changes aim to strengthen India’s position as a global financial center by improving regulatory clarity and investor participation.
The Department of Economic Affairs (DEA) has outlined a clear strategy to drive economic development by focusing on two key pillars: attracting foreign capital and improving the depth of the domestic corporate bond market. Joint Secretary Alok Tiwari addressed these priorities at a recent FICCI Capital Markets conference in Mumbai, highlighting that government and regulatory bodies are aligned on the need to make India a more competitive global financial center.
While foreign capital inflows into India have been subdued recently, there were signs of an upturn in July 2026. The government is now looking to sustain this momentum by making it easier for global investors to participate in the Indian market. To achieve this, the authorities are currently working on simplifying regulatory frameworks. Specifically, the Reserve Bank of India is seeking public feedback on proposed amendments to Foreign Exchange Management (FEM) and Foreign Investment (EI) rules. The goal is to move toward a system based on clear principles that is easier for investors to navigate.
In addition to foreign investment, the DEA is focusing on the domestic corporate bond market, which has historically struggled with limited liquidity and low secondary market participation. This lack of depth makes it difficult for companies to raise long-term debt efficiently and limits options for investors. To address these gaps, the Finance Ministry and the Securities and Exchange Board of India (SEBI) are collaborating on a new framework. A dedicated SEBI committee is currently developing strategies to encourage market-making, which is intended to increase the frequency of trades and ensure that investors can buy or sell bonds more easily.
Beyond these specific measures, the government is also working on a new Securities Markets Code. This legislative effort is designed to replace outdated regulations with a forward-looking framework. The code aims to strike a balance between stricter regulatory accountability and the decriminalization of minor procedural breaches. By creating a more predictable legal environment, the government hopes to enhance investor protection, which is essential for building confidence in both the equity and debt markets.
For investors, these policy updates signal an effort to modernize India's financial ecosystem. While the actual impact will depend on the final implementation of the revised FEM rules and the success of the bond market-making framework, the focus on reducing regulatory friction is a clear shift toward improving market accessibility. The next important steps to track include the official notification of the amended foreign investment rules and the specific operational details of the new bond market framework, which will determine how effectively liquidity can be improved in the corporate debt space.