India Considers Long-Term Capital Gains Tax Cut to Reversing Foreign Investor Outflows
Indian regulators and industry bodies, including the PHD Chamber of Commerce and Industry, are urging the government to abolish long-term capital gains (LTCG) tax for foreign portfolio investors. This push comes as India faces significant capital outflows, with over $30 billion exiting the market so far this year. Foreign holdings in Indian equities have dropped to an all-time low of 14%. Finance Minister Nirmala Sitharaman has acknowledged the outflow trends and indicated she would consider reviewing the tax regime. While experts suggest a tax cut could improve sentiment by aligning India with other Asian markets, analysts warn it may not be a silver bullet. Investors are currently prioritizing earnings predictability and relative returns over tax breaks, especially as they pivot toward cheaper alternatives like Chinese equities.
Topics: Capital Gains Tax Foreign Portfolio Investors Indian Economy Market Outflows Regulatory Policy