India's bond yield premium over the US has narrowed to its smallest in two decades, likely risking fund outflows from local debt. The spread between the benchmark 10-year India debt and the US has shrunk to about 173 basis points, driven by India's strong fiscal position, easing inflation, and expectations of lower interest rates. Despite the shrinking yield advantage, India's strong macros may still ensure some inflows, and foreign funds have poured a net $2.3 billion in rupee debt so far this year.