NEW DELHI, INDIA – MAY 17: People visit India Gate on May 17, 2026 in New Delhi, India. (Photo by Elke Scholiers\/Getty Images)<\/p>\n
Elke Scholiers | Getty Images News | Getty Images<\/p>\n
India\u00a0plans to scrap\u00a0capital\u00a0gains\u00a0tax\u00a0on\u00a0foreign\u00a0portfolio investments in\u00a0government\u00a0securities, which could help boost such inflows, a\u00a0source\u00a0familiar with the matter said on Thursday.<\/p>\n
The South Asian nation is looking to attract\u00a0foreign\u00a0capital\u00a0to counteract pressure on its rupee currency, which has weakened more than 5% since the start of the year, squeezed by higher oil prices and\u00a0foreign\u00a0portfolio outflows in equities.<\/p>\n
The Economic Times newspaper was the first to report Wednesday’s cabinet approval of the plan. The finance ministry did not immediately respond to a Reuters email seeking comment.<\/p>\n
India’s benchmark bond yield\u00a0eased one basis point to 7.01% in opening trade.<\/p>\n
It was not immediately clear when the plan will take effect.<\/p>\n
Foreign\u00a0investors\u00a0are subject to a long-term\u00a0capital\u00a0gains\u00a0tax\u00a0of 12.5% on listed shares and\u00a0bonds\u00a0held longer than 12 months. A withholding\u00a0tax\u00a0of 20% they pay on interest earned in\u00a0government\u00a0bonds\u00a0may also be removed, the\u00a0source\u00a0said.<\/p>\n
India\u00a0stands more or less in line with global standards on equity\u00a0taxation, but is among the few countries that\u00a0tax\u00a0non-resident flows into debt, said the\u00a0source, who sought anonymity as the decision is confidential and not yet made public.<\/p>\n
Foreign\u00a0investors\u00a0have maintained net positive flows into\u00a0Indian\u00a0government\u00a0debt this year, investing $1.4 billion, but nearly $28 billion has been pulled from equity markets.<\/p>\n