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UPSC » Daily News Analysis ‘Foreign Investors Pump $6 Billion into Fully Accessible Route (FAR) Bonds’ : 1 April

Daily News Analysis ‘Foreign Investors Pump $6 Billion into Fully Accessible Route (FAR) Bonds’ : 1 April

Table of Content

What is the Fully Accessible Route (FAR)?

  • The Fully Accessible Route (FAR) was introduced by the Reserve Bank of India (RBI) in March 2020.
  • It allows unrestricted investment by non-resident investors (including FPIs) in specified categories of government securities (G-secs).
  • FAR removes the investment caps that otherwise apply to FPIs in the bond market.
  • The purpose is to enhance foreign participation in India’s bond market and integrate it with global bond indices.

Recent FPI Investment Trend (Jan–Mar 2025)

  • Foreign Portfolio Investors (FPIs) have invested over ₹51,730 crore (~$6 billion) in Indian FAR bonds since January 2025.
  • In March 2025 alone, FPIs invested ₹29,044 crore in FAR-designated bonds, according to NSDL data.
  • This surge in bond investment occurred even as FPIs continued selling in Indian equity markets.
    • FPI outflows from stocks declined from ₹1.12 lakh crore (Jan–Feb) to just ₹3,973 crore in March.

Factors Behind the Surge in Bond Inflows

  • Inclusion of Indian G-secs in global indices: JP Morgan (June 2024), Bloomberg (Jan 2025), and FTSE Russell (Sep 2025) have announced phased inclusion of Indian FAR bonds.
  • Attractive bond yields, improved rupee, and better macroeconomic indicators (GDP growth, CPI inflation) supported FPI interest.

Why in News?

As of April 1, 2025, foreign investors have pumped $6 billion into FAR-designated bonds.