India's finance ministry is weighing extra steps to lure foreign capital after rising energy costs strained its external balances. A senior official, speaking on condition of anonymity, said the government plans to deepen the bond market and simplify investor access. The move aims to shore up reserves and fund infrastructure projects that have stalled amid tight financing in the near term.

Analysts note that India's current account deficit widened to 3.2% of GDP in the March quarter, prompting concerns about debt sustainability. By expanding the domestic debt platform, policymakers hope to attract portfolio inflows that could offset the shortfall. A comparable push in 2022 lifted foreign holdings of Indian sovereign bonds by roughly $30 billion, showing market appetite when yields stay attractive.

Investors will weigh the policy shift against lingering risks, including volatile commodity prices and a slowdown in export growth. If the government can deliver clearer issuance calendars and tax incentives, foreign capital inflows may flow faster, tightening yields and supporting the rupee. The immediate effect will be a modest rise in sovereign bond volumes as capital seeks higher‑yielding emerging‑market assets.