The Indian government and the Reserve Bank of India announced a package of measures on June 5, 2026 [1], to attract foreign capital.
These actions aim to stabilize the rupee as the currency faces pressure from rising crude oil prices and record outflows from Indian equities. The measures are designed to help finance a widening current-account deficit [2].
The policy package includes the expansion of government securities available to foreign portfolio investors [3]. Additionally, the authorities are easing investment limits for overseas individuals to encourage more capital to enter the domestic market [3].
To further boost dollar inflows, the government and the RBI are introducing temporary mechanisms for overseas borrowing and foreign exchange deposits [3]. These tools provide a short-term bridge to increase liquidity and support the currency's value against global volatility [2].
The coordinated effort between the central bank and the government represents a significant push to reverse the trend of capital flight. By opening more avenues for foreign investment, India hopes to mitigate the impact of external economic shocks, particularly those stemming from the energy market [2].
Financial analysts said that the focus on government securities and overseas borrowing is a strategic move to lure institutional investors back to the region [3]. The timing of the announcement on June 5, 2026 [1], follows a period of heightened volatility in the Indian financial markets.
“The measures are designed to help finance a widening current-account deficit.”
This policy shift indicates that India is prioritizing immediate currency stability and liquidity over strict capital controls. By easing entry for foreign portfolio investors and creating temporary borrowing windows, the RBI is attempting to offset the systemic risk posed by expensive crude oil imports, which typically drain foreign exchange reserves and weaken the rupee.
