Mumbai – The administration is willing to consider stakeholder suggestions on lowering capital gains tax for stock market investments to improve appeal for foreign portfolio investors, Finance Minister Nirmala Sitharaman stated on Monday.
Foreign portfolio investors have exited Indian equities due to elevated capital gains levies, a depreciating rupee and changing global fund flows.
“We are always prepared to hear from stakeholders on this and other matters. Their inputs will be reviewed,” Sitharaman remarked when asked about possible tax reductions. She spoke at an awards ceremony hosted by the Cotton Textiles Export Promotion Council in Mumbai.
Authorities levy a 20% short-term capital gains tax on equity shares and mutual funds, plus a 12.5% long-term rate on yearly gains exceeding ₹125,000 for holdings sold after one year.
FPIs recorded record net sales of securities worth ₹1.8 trillion in FY26, the largest in 34 years and higher than ₹1.3 trillion the prior year. Peak outflows occurred in March 2026 near ₹1.18 trillion. Reserve Bank of India figures show net FPI outflows surpassing $10 billion, roughly ₹95,200 crore, in FY27 to date, including $8.3 billion in April 2026 and $1.8 billion through 20 May.
Regarding sovereign bonds to draw foreign capital amid rupee weakness, Sitharaman noted the government is collecting numerous suggestions on currency, investments and gold instruments. “Submissions arrive voluntarily or via departments. All will be examined,” she added.
At a separate Small Industries Development Bank of India event marking its 37th anniversary, the minister cautioned that West Asia tensions may raise fuel costs and affect Indian exports amid global uncertainty.
“The regional crisis carries implications beyond diplomacy, potentially increasing fuel expenses, delaying shipments, raising shipping costs, creating input shortages and pressuring working capital and export orders,” she said.
Describing global crude prices as volatile and dynamic, Sitharaman noted resulting sharp rises in fertiliser and gold prices that challenge India’s external accounts. Prime Minister Narendra Modi’s appeal to conserve foreign exchange relates to fuel, fertiliser and currency or gold purchases. Domestic conditions remain positive and resilient, supported by strong demand indicators, she stated.
The rupee declined 11% in FY26 and over 5% since the US-Iran conflict began on 28 February, touching a record low of 96.90 versus the dollar on 20 May.
Supply disruptions, fuel and fertiliser price surges are substantial and must be settled in foreign exchange, she observed, yet expressed confidence India can manage these external pressures.
To cushion the impact of rising global crude, the government reduced central excise on petrol and diesel by ₹10 per litre from 27 March, at an estimated FY27 cost exceeding ₹1 trillion.
Without that cut, retail fuel prices would have risen immediately by the same amount, she noted, with subsequent increases stemming from oil marketing companies.
Earlier this month authorities raised export excise on petroleum products to secure domestic supply: ₹3 per litre on petrol, ₹16.5 on diesel and ₹16 on jet fuel.
Exports are restricted to meet local demand rather than solely for foreign exchange earnings, ensuring stability for consumers, transporters and manufacturers, she explained.
Retail fuel prices have been increased four times since 15 May, adding roughly ₹7.5 per litre cumulatively to petrol and diesel.
