Government announces measures to deepen G-Sec market and facilitate greater FPI in equity segment

📌 Summary:

• Ministry of Finance announced reforms to deepen the G-Sec market and boost Foreign Portfolio Investment (FPI) in equities
• Individual Persons Resident Outside India (PROIs) allowed to invest in listed Indian equities via the Portfolio Investment Scheme (earlier open only to NRIs/OCIs)
• Per-company individual PROI limit raised from 5% to 10%; aggregate PROI limit raised from 10% to 24%; via FEMA (Non-Debt Instruments) Third Amendment Rules, 2026
• Fully Accessible Route (FAR) expanded to include new 15/30/40-year G-Secs and Sovereign Green Bonds
• For FPIs under the General Route: short-term, concentration and security-wise limits removed; overall caps retained (6% of central G-Secs, 2% of State G-Secs)
• 'General' and 'long-term' sub-limits merged; aims to attract pension funds, insurers and sovereign wealth funds and smoothen the yield curve

🎯 UPSC Relevance: GS3 — capital markets, foreign investment, government borrowing and yield curve

📝 Prelims Facts:

• FAR = Fully Accessible Route for FPI in G-Secs
• FPI cap: 6% of outstanding central G-Secs; 2% of State G-Secs
• Enabling rule: FEMA (Non-Debt Instruments) Third Amendment Rules, 2026
• Sovereign Green Bonds added to FAR-eligible securities

🔑 Key Term: FPI — Foreign Portfolio Investment: investment in financial assets without management control, distinct from FDI