Investor-Friendly Taxation and Lower Capital Gains Key to Retaining FPI Capital, Says PHDCCI President

Amid rising bond yields in the United States, lowering capital gains taxes will be crucial in retaining investments by Foreign Portfolio Investors (FPIs), according to Anil Gupta, the newly appointed President of the industry chamber PHDCCI.

Speaking to businessline, Gupta, who also serves as the Chairman and Managing Director of KEI Wires and Cables, acknowledged that higher yields have contributed to the outflow of foreign institutional investments from the stock market. He noted that US bond yields are currently between 5.5 and 6 percent, driven by high inflation and the Federal Reserve's refusal to reduce interest rates. However, he suggested that adopting investor-friendly policies can help largely stem capital outflows from India.

Data from Central Depository Services Ltd (CDSL) shows that FPIs withdrew ₹34,843 crore from Indian equities in October, marking the second consecutive month of heavy outflows. These withdrawals were driven by concerns over elevated crude oil prices, global interest rates, and corporate earnings outlooks, bringing cumulative FPI outflows in 2026 to ₹2.95 lakh crore, despite FPIs turning buyers toward the end of last month.

The industry chamber has formally submitted a representation to the Central Board of Direct Taxes to review capital gain taxes. When asked about the response, Gupta stated that the government would not comment ahead of the Union Budget, noting that budget matters remain confidential and the government is currently only listening to stakeholder inputs.

Addressing measures needed to accelerate economic growth amid inflation risks and global uncertainties, Gupta emphasized the need for continued handholding of MSMEs and the agricultural sector, particularly providing relief from untimely rains. From a state government perspective, he highlighted that land, labour, and power are critical inputs controlled by states that drive industrial growth.

Gupta urged states to help industries procure land at reasonable prices quickly and to improve labour mobility by enhancing housing and schooling facilities in industrial clusters. He also commended central government efforts to improve connectivity through new roads, expressways, and airports, suggesting that increasing inland container depots would further improve connectivity to ports.

Commenting on the broader economic situation, Gupta pointed out that inflation remains a significant challenge, fueled by high oil and gas prices that increase input and transportation costs for industries, alongside rising prices for agriculture and raw materials.

"The concerns raised regarding FPI outflows and rising global bond yields highlight the need for competitive fiscal policies in India. While infrastructure connectivity and state-level support for land and labour are vital for domestic industrial growth, aligning taxation frameworks remains critical to maintaining foreign investor confidence. Businesses must navigate these macro-economic shifts carefully while policymakers weigh long-term fiscal adjustments." — Dr. Shishir Gupta, Founder & CEO, StartupLanes