South Korea's National Pension Service (NPS), managing over $1.3 trillion in assets, is set to apply for an investment license under India's new compliance window for foreign investors in government bonds. This move aligns with India's strategy to attract stable capital inflows amid a depreciating rupee.
India has been actively working to increase foreign capital in its government bonds through simplified registration processes, reduced taxes, and efforts to join global bond indices. The country's benchmark 10-year sovereign bond yields around 7%, presenting an attractive opportunity compared to developed-market securities.
Sagarmala Finance Corporation is planning its first blue bond issuance on September 28, aiming to raise six billion rupees for maritime projects. This initiative is part of a broader strategy to diversify funding sources and enhance infrastructure development.
Foreign investors have poured $14 billion into Indian government bonds over the past year, while equity investments saw a significant sell-off of nearly $45 billion between 2025 and 2026. This shift underscores the growing focus on bond investments.
The new compliance window, designed to ease the investment process for pension and sovereign wealth funds, requires documentation submission every 10 years instead of three. This change is expected to boost foreign participation in India's debt market.
While NPS has previously invested in Indian securities through offshore funds, this marks its first dedicated government-securities-only investment vehicle in India, potentially increasing its allocation to sovereign bonds.
Background
India's efforts to attract foreign investment in government bonds are crucial for diversifying funding sources and stabilizing capital inflows. With the rupee trading near historic lows, these measures are timely and strategic.
Looking ahead, the success of initiatives like the blue bond issuance and the new compliance window will be pivotal in determining the future trajectory of foreign investments in India's debt market.
