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FM Sitharaman had made way for the controversial derivative instruments to re-enter India's stock market in Budget 2023. In Budget 2024, she extended the timeline for banks to set-up an arm to issue P-Notes up to March 2025. It is a gimmick to make GIFT City popular among foreign investors and make them avoid using tax havens like Singapore and Mauritius to invest in India. At its peak, P-Notes accounted for nearly rs 4 lakh crore ($40 Billion) worth investments in India, , Interim Budget 2024-25, p-notes

The growth in P-notes generally aligns with the trend in FPI flows. When there is a global risk to the environment, investment through this route increases, and vice-versa.

This year, the budget exempted taxes on income generated from trades in P-notes by a foreign investor in IFSC, GIFT City. However, the opaque structure of these instruments has made regulators uncomfortable several times.

This was the highest level since November 2022, when investment through the route stood at Rs 96,292 crore.

P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.