The biggest advantage you have in G-Secs is the Zero Default Risk of the G-Secs. The best reasons for invest in G-Secs, therefore, is that it enjoys the greatest amount of security possible. The other advantages of investing in G- Secs include:

Greater safety and lower volatility as compared to other financial instruments

Variations possible in the structure of instruments like Index linked Bonds, STRIPS

Higher leverage available in case of borrowings against G-Secs

No TDS on interest payments

Tax exemption for interest earned on G-Secs. Up to Rs.3000/- over and above the limit of Rs.12000/- under Section 80L (as amended in the latest Budget)

Greater diversification opportunities

Adequate trading opportunities with continuing volatility expected in interest rates the world over