BNY’s Bob Savage notes that India is considering cutting taxes on foreign investors’ bond income to attract inflows and support the Indian Rupee (INR), which has fallen over 6% against the US Dollar (USD) in 2026. Authorities also requested an extension of the U.S. waiver on Russian Oil imports to stabilize domestic energy supply and costs. These measures aim to ease funding pressures and curb INR depreciation.

Policy moves to stem rupee weakness

"India saw a INR reversal and bond rally after floating a plan to reduce bond investment taxes on foreign investors."

"India is considering reducing taxes on foreign investors’ bond income to align with global norms and attract capital inflows, at the recommendation of the Reserve Bank of India. This move aims to curb the rupee’s depreciation, which has fallen over 6% against the dollar in 2026, making it Asia’s worst-performing currency."

"Currently, foreign investors pay around 20% tax on bond interest, up from 5% before 2023, and hold just 3% of the $1.3tn bond market. The tax cut is expected to support funding a larger import bill amid rising oil prices and help India achieve its development goals by 2047."

"India’s wholesale price index (WPI) inflation for April 2026 rose sharply to 8.3% y/y (from 3.88% in March 2026), driven mainly by higher prices for mineral oils, crude petroleum and natural gas, basic metals and other manufacturing."

"India has asked the U.S. to extend its waiver on Russian oil imports beyond May 16, amid ongoing disruptions in energy supply caused by the nearly 11-week war in the Persian Gulf."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)