Edelweiss' Rashesh Shah Calls For Capital Gains Tax Exemption For FIIs

India should consider exempting foreign investors from capital gains tax on equities to revive overseas investment and strengthen the stock market, Edelweiss Financial Services Chairman and Managing Director Rashesh Shah has said.

Speaking to Bloomberg Television, Shah suggested that removing the tax could encourage foreign investors to make long-term allocations to Indian equities.

His proposal comes amid growing calls for tax relief for foreign portfolio investors (FPIs).

Finance Minister Nirmala Sitharaman recently indicated that she would consider changes to stock market taxation but did not confirm any proposed revisions.

Currently, long-term capital gains on listed equities held for more than one year attract 12.5% tax, while short-term gains are taxed at 20%.

Foreign investors have withdrawn more than $28 billion from Indian equities this year, according to Bloomberg data.

However, overseas investors have invested over $5 billion during the past three weeks, contributing to a market recovery of nearly 10%.

The renewed buying follows weakness in global artificial intelligence stocks and declining oil prices.

Shah identified oil prices and global risk aversion as major risks for Indian markets.

Nevertheless, he said sustained domestic investment could provide stability during periods of international volatility.

He estimated that mutual funds could invest $40 billion to $50 billion annually in equities, with insurance companies and pension funds contributing another $20 billion to $25 billion.

Shah expects annual domestic institutional equity inflows of approximately $60 billion to $80 billion, creating opportunities for companies to raise capital through initial public offerings (IPOs).

Edelweiss plans to list its asset management business within 18 to 24 months.

Edelweiss Mutual Fund manages assets worth approximately ₹1.8 lakh crore and counts US private equity firm WestBridge Capital among its investors.

Another group company, EAAA India Alternatives, recently entered the stock market following a ₹1,200 crore IPO.

Shah said the group ultimately intends to list its underlying businesses, including insurance and asset management operations.

Level up your brain the fun way. Play daily games and quizzes on FPJ Smart!