Pictet Asset Management and Neuberger Berman Group LLC are increasing exposure to Indian government bonds following New Delhi's sweeping reforms. The government scrapped taxes on foreign debt holdings and eased ownership restrictions, prompting a $3.4 billion inflow into index-eligible bonds since June 5. M&G Investments has also turned more positive on India's debt market.

These measures come after the rupee sank to record lows amid energy price pressures and equity outflows. The tax break could lift foreign investor returns by 15%-20%, according to Deloitte India. Pictet's Carrie Liaw noted India offers "high-yielding, lower-beta" opportunities compared to other emerging markets. The reforms have already helped the rupee recover 2.5% from its lows.

India's approach contrasts sharply with other Asian nations relying on rate hikes. Bank Indonesia recently surprised markets with rate increases while Philippine authorities warned currency speculators. M&G's Low Guan Yi said India now stands apart from emerging markets with constrained policy credibility.

However, some investors remain cautious. Aberdeen Investments' Kenneth Akintewe cited Middle East tensions as a near-term hurdle despite expecting buying opportunities. The moves could eventually enable Euroclear settlement for Indian onshore debt, further easing foreign access.