Govt May Introduce More Steps To Attract Foreign Capital: Sitharaman

Finance Minister Nirmala Sitharaman indicated on June 15 that the government may introduce further measures to attract foreign capital, stating that recent tax relief for sovereign debt investments was only the beginning of broader reforms.

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Speaking at the Mindmine Summit 2026 in New Delhi, she said India views the bond market as a key channel for absorbing overseas capital inflows.

“We believe the bond market can be a good way to absorb capital coming in. As of now, we have done it only for government securities. Certainly, that is not the end of the story. We recognise we need more foreign capital coming in,” she said.

Sitharaman added that the government, in coordination with the Reserve Bank of India, has already reviewed and implemented steps related to capital gains tax and withholding tax to make India’s debt market more attractive to foreign investors.

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Earlier this month, the Centre exempted foreign portfolio investors (FPIs) from capital gains tax on gains arising from the sale, exchange, or transfer of government securities. It also removed the 20% withholding tax on interest income from such investments.

Previously, FPIs paid a 12.5% long-term capital gains tax on government securities held for more than 12 months, along with withholding tax on interest earnings.

The Finance Minister also highlighted the importance of domestic participation in supporting financial markets amid global uncertainty. “Our own participation in the stock market has buoyed it considerably,” she noted.

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She further pointed to rising global risks, particularly those linked to crude oil imports.

Sitharaman said not only are oil prices a concern, but insurance costs and shipping risks associated with vessels passing through the Strait have also increased due to geopolitical tensions.

She stressed the importance of maintaining adequate foreign exchange reserves to meet growing external demand pressures.

At the same time, she emphasized India’s structural strength, noting that the country’s large domestic market and rising consumption provide economic stability even amid global volatility.

However, she acknowledged that imports remain under pressure due to global disruptions.

Overall, Sitharaman’s remarks underlined a dual focus: attracting foreign capital through reforms while strengthening domestic resilience to navigate external risks.

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