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India plans to scrap superior gains taxation connected overseas portfolio investments successful authorities securities, which could assistance boost specified inflows, a source acquainted with the substance said connected Thursday (June 4, 2026).
The South Asian federation is looking to pull overseas superior to counteract unit connected its rupee currency, which has weakened much than 5% since the commencement of the year, squeezed by higher lipid prices and foreign portfolio outflows successful equities.
The Economic Times paper was the archetypal to study Wednesday’s (June 3, 2026) furniture support of the plan. The concern ministry did not instantly respond to a Reuters email seeking comment.
India’s benchmark enslaved output eased one ground constituent to 7.01% successful opening trade, though it was not instantly wide erstwhile the program would instrumentality effect.
Any taxation easing should assistance flows astatine the margin, said Madhavi Arora, chief economist astatine Emkay Global Financial Services.
“It won’t beryllium a magic slug successful the existent context,” she cautioned, but added it could beryllium affirmative successful the mean term.
Foreign investors are taxable to a semipermanent superior gains taxation of 12.5% connected listed shares and bonds held longer than 12 months. A withholding taxation of 20% they pay connected involvement earned successful authorities bonds whitethorn besides beryllium removed, the root said.
India stands much oregon little successful enactment with global standards connected equity taxation, but is among the fewer countries that taxation non-resident flows into debt, said the source, who sought anonymity arsenic the determination is confidential and not yet made public.
Foreign investors person maintained nett affirmative flows into Indian authorities indebtedness this year, investing $1.4 billion, but astir $28 cardinal has been pulled from equity markets.
Attracting enslaved flows
Over the past fewer years, India has scrapped investment limits connected a definite acceptable of securities nether a alleged ‘fully accessible route’, successful its effort to lure more overseas capital.
That helped it summation introduction to cardinal planetary enslaved indices specified arsenic the J.P. Morgan Emerging Market Bond Index and the Bloomberg emerging marketplace section currency enslaved index.
In January, Bloomberg deferred a determination to see India successful its much wide tracked Global Aggregate Index - a determination apt to come up for reappraisal successful June.
