The Full Form of FMP is Fixed Maturity Plans.

Fixed Maturity Plan (FMP) is a fixed tenure mutual fund scheme that invests its corpus in debt instruments maturing in line with the tenure of the scheme. The tenure of an FMP can vary between a few months to a few years.

FMPs are ideal for investors who are keen to stay invested for the tenure of the scheme and seeking an alternate investment option which aims to provide better post-tax returns with minimal interest rate risk

FMPs invest its funds in various fixed interest-bearing securities maturing in line with the maturity of the scheme. Generally, FMPs generate returns that are equivalent to the yield of securities with similar maturities prevailing on the date of the investment.

Adjusting the cost of capital asset (in this case your investment in FMP) by incorporating the impact of inflation, on the amount you have invested, during the period of holding of investment i.e. the time (Financial Years) between your investment and maturity of the FMP.

If you invest in a 1200-day FMP on 23rd March 2015 then it will mature on 4th July 2018, hence you can index the cost of your investment using the CII(Cost Inflation Index) values from FY 2014-15 and FY 2018-19 to lower the tax impact.