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Informist, Tuesday, May 26, 2026

 

By Cassandra Carvalho and J. Navya Sruthi

 

MUMBAI – The subsidy for hedging dollar exposure is not a necessity but will benefit foreign investors, according to JPMorgan Chase Bank India Chief Executive Officer Pranav Chawda. Several bankers and economists have recommended to the Reserve Bank of India measures such as subsidies on dollar-hedging costs to draw capital inflows into the country.

 

"I would say that it's not required firstly, but if they (regulators) would come up (with it), then it's a great thing," Chawda said on the sidelines of a CareEdge debt market conference Tuesday. "Anything is good. If today anybody gives you a subsidy of 1% also, it's good; half a per cent also. It'll only add to your benefit."

 

Concern about the depreciation of the rupee is momentary and will disappear once financial markets settle and the Strait of Hormuz re-opens, Chawda said. However, the current geopolitical risks and currency volatility are a concern among investors, the official said. The rupee has depreciated about 6% against the dollar in 2026. The local currency has been battered by the surge in crude oil prices amid the war in West Asia.  

 

"If the US sovereign paper (Treasury note) can give you a five and a half per cent return with zero risk, you will say in India, if I come, I have to at least get five and a half, plus the project risk that I will carry, plus the depreciation of the currency. After that, I need a supernormal return because I have taken the equity risk," Chawda said.

 

India's fiscal situation is fairly robust and not a worry, Chawda said. India's foreign exchange reserves are also more than enough and should be used by the central bank in times such as the current West Asia crisis, he said. The current geopolitical scenario is unlikely to dampen the possibility of the inclusion of India's fully accessible route government bonds in Bloomberg Index Services Ltd.'s flagship Global Aggregate Index, and any removal of withholding tax on Indian government bonds "obviously will be their consideration," he said. Foreign investors are waiting for the inclusion to happen, and there is never a right time, he said. Bloomberg Index Services Ltd. had deferred the inclusion in January, saying it plans to provide the next update on the potential inclusion by mid-2026. 

 

At a panel discussion at the event, Chawda said foreign exchange reforms should be implemented "not under panic" but as a structural change. "Reactive" measures in foreign exchange do not sit well with global investors, as they do not signal stable policy, he said. There are structural measures in foreign exchange that policymakers can opt for, which should be evaluated in different situations and considerations, he said.

 

Chawda called for categorising foreign portfolio investors in Indian debt instead of grouping them. This is because each foreign portfolio investor has a different objective to achieve, be it returns or risk mandate, Chawda said. "Make it (regulation) end-use specific, based on what is the investor looking at, what is the underlying asset, and the risk that we want to mitigate – which is the flight risk or the hot money – is that mitigated? If yes, those categories could be kept separate," Chawda said.  End

 

Edited by Saji George Titus

 

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