Govt Meets Foreign Investors To Boost FPI Inflows

The Indian government and the Securities and Exchange Board of India (Sebi) have initiated discussions with foreign portfolio investors (FPIs) to understand their concerns and attract overseas capital back into domestic markets.

The meetings, attended by representatives of major global investment firms, aim to simplify regulations and improve the investment environment for foreign funds.

According to reports, FPIs have purchased shares worth around ₹30,000 crore over the past two months, but total foreign outflows from Indian markets in 2026 have remained high at nearly ₹2.4 lakh crore.

One of the major concerns raised by foreign investors is taxation, with FPIs requesting the government to remove the Long-Term Capital Gains (LTCG) tax on listed securities and reduce Securities Transaction Tax (STT) rates.

The LTCG tax was reintroduced in 2017 and later increased to 12.5% in the July 2024 Union Budget. FPIs have pointed to recent policy changes in the debt market, where tax exemptions for foreign investors on profits from debt securities helped attract fresh investments.

Some foreign funds have also sought clarity on the impact of the Supreme Court’s ruling in the Tiger Global tax case, which stated that certain Mauritius-based foreign funds could be liable to pay Indian taxes on profits from investments made before 2017.

The government is seeking suggestions on improving the investment environment for foreign funds, and the discussions come at a time when Indian equities have faced pressure due to aggressive selling by foreign investors.

The meetings are part of efforts to boost FPI inflows into Indian markets, which have been affected by high outflows in 2026.

The government's move to engage with FPIs is seen as a positive step towards addressing the concerns of foreign investors and attracting more overseas capital into domestic markets.

The outcome of these discussions is expected to have a significant impact on the Indian economy, as FPI inflows play a crucial role in shaping the country's financial markets.

In recent years, India has taken several steps to improve the investment environment for foreign funds, including simplifying regulatory processes and reducing compliance requirements.

However, despite these efforts, FPI outflows have remained high, and the government is now seeking to address the concerns of foreign investors and attract more overseas capital into domestic markets.

The success of these efforts will depend on the government's ability to address the concerns of FPIs and create a more favorable investment environment for foreign funds.

If successful, these efforts could lead to increased FPI inflows, which would have a positive impact on the Indian economy and financial markets.