Mumbai: India’s stock market has been under pressure for many months because of heavy selling by Foreign Institutional Investors (FIIs). This selling has hurt market mood, liquidity, and even foreign exchange reserves.
To improve the situation, the government is reportedly thinking about giving tax incentives to foreign pension funds and endowment funds. The aim is to attract long-term foreign money back into Indian markets.
Samir Arora Strongly Opposes the Idea
Helios Capital founder and well-known fund manager Samir Arora has openly criticized this proposal on social media platform X. He said giving tax benefits to only a few foreign investors is the wrong approach and will not improve FII flows.
According to him, this plan will only increase confusion and complexity in the market.
Why Special Tax Benefits Will Not Work?
Samir Arora explained that most foreign pension funds and endowments do not invest directly in Indian stocks. Instead, they invest through India-focused ETFs listed in the US or through actively managed global funds.
In such cases, the taxable entity is the fund or ETF, not the individual investor. So it is practically impossible to give tax relief to some investors sitting inside the same fund and not to others. This will make tax rules complicated and unclear.
FII Sentiment Will Not Improve Quickly
Arora also pointed out that long-term foreign investors take time to make decisions. Even if tax incentives are announced, investors will first study the structure, take internal approvals, and review risks.
This process can take many months or even a year. So this method will not bring quick relief to the market.
Simple and Powerful Solution: Zero LTCG for All
Samir Arora’s clear suggestion is: “Make Long-Term Capital Gains (LTCG) tax zero for everyone.”If LTCG after one year is removed for both Indian and foreign investors, it can:
- Improve market confidence
- Slow down FII selling
- Boost long-term investment
- Support forex reserves
- Bring back investor enthusiasm
If the government worries about revenue loss, it can slightly adjust Security Transaction Tax (STT). This may also reduce excessive speculation and high F&O volumes, which SEBI wants.
