More measures likely to attract foreign capital, says FM Sitharaman

Finance Minister Nirmala Sitharaman on Monday indicated that there will be more steps to attract foreign capital into the Indian market, saying recent measures announced for the bond market were only the beginning of a broader effort to draw overseas investments.

Speaking at the Hero Mindmine Summit 2026, Sitharaman said the government recognised the need for greater foreign capital inflows and was working with the Reserve Bank of India (RBI) to ensure markets receive the required investments.

“We recognise we need more foreign capital to come in. But the fact that RBI has now allowed public sector undertakings (PSUs) and banks to go out and pick money from outside… certainly, that’s not the end of the story. We will be doing more,” she said.

Referring to the recent measures announced for the bond market, Sitharaman said the government had undertaken an analysis and introduced steps to make bonds more attractive to foreign investors through the Fully Accessible Route (FAR) and a favourable withholding tax regime.

She said the RBI had also created a framework under which PSUs and banks could raise funds overseas, with the central bank bearing the currency hedging risks.

The finance minister said India, like businesses across the world, was facing uncertainty from factors beyond its control, including tariffs, fluctuations in commodity prices and disruptions in global supply chains.

She noted that while India’s large domestic market provided a cushion, the country remained dependent on imports of several critical intermediary and raw materials, exposing it to external shocks.

According to Sitharaman, rising crude oil prices, higher insurance costs and shipping-related risks were among the factors affecting India’s import bill and foreign exchange requirements.

She also described the monsoon as an annual challenge for policymakers, particularly amid concerns over weather disruptions linked to El Nino conditions. While adequate buffer stocks were available to prevent food shortages, she said farmers’ incomes could come under pressure if rainfall was deficient.

Highlighting volatility in the fertiliser market, Sitharaman said global supply conditions had changed multiple times since the Union Budget was presented.

While concerns had emerged over shortages after some traditional suppliers reduced exports to build domestic inventories, the re-entry of China into the export market after nearly a year had eased some of those fears.

“So, the supply was that shortage which people thought was offset. So, one week you have a challenge, the next week that challenge is addressed, but new challenges come up. So, it’s being ready for every such exigency,” she said.

Separately, Sitharaman said India was witnessing rapid growth in investments in data centres and global capability centres (GCCs), with state governments actively competing to attract such projects.

“We’ve been engaging with the states, not just the Centre, to have a policy on data centres and GCCs,” she said, adding that these investments were expected to generate jobs and support economic activity over the coming decade.

The finance minister said the growth of the sector was no longer limited to traditional technology hubs such as Bengaluru, Hyderabad and the National Capital Region (NCR). Now, Tier-II cities are also emerging as destinations for investments.

“Cities like Mangaluru… are also becoming hosts to data centres, and it is just spreading so quietly,” she said.

She added that states had not only framed policies but were also proactively engaging with investors to attract GCCs and data centre projects.

“And, people have not treated it as, ‘Oh, what is this? What’s data centre?’ No, there is a layer of our Indian technicians and also youth who are catching on this very easily,” Sitharaman said.