Sitharaman Addresses FPIs’ Concerns Regarding Equity Taxation

NEW DELHI: Finance Minister Nirmala Sitharaman announced on Monday that the government will address concerns from foreign portfolio investors (FPIs) regarding India’s capital gains tax structure. This comes amid increasing calls for a reduction in long-term capital gains (LTCG) tax on equities. Sitharaman’s comments were made during the Financial Express Leadership Awards 2026, where she acknowledged the anxieties of both retail investors and equity market participants.

Sitharaman emphasized that while taxation is a significant factor, it is not the sole determinant of investment decisions. She noted that India’s tax structure remained unchanged in 2023-24, a period that saw record foreign investment inflows. However, she recognized that market conditions have shifted, with net outflows from foreign institutional investors (FIIs) increasing before showing signs of recovery. “Circumstances have changed. Challenges have grown,” she stated, indicating her awareness of the heightened concerns among investors.

The finance minister highlighted the necessity of capital to maintain India’s economic growth, which is projected to exceed 7%. She expressed her commitment to listening to investor concerns, stating, “In order to keep that intact, we need capital.” Sitharaman also mentioned the government’s initiatives to enhance the bond market while acknowledging the demand for more support in equity markets. Her remarks coincide with rising calls for a review of the LTCG tax regime, with the Securities and Exchange Board of India (SEBI) reportedly recommending tax relief for both foreign and domestic investors.