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…
Edelweiss Financial Services' CEO Rashesh Shah has called for a tax exemption on capital gains for foreign investors to boost overseas investment and bolster the Indian stock market. Speaking to Bloomberg Television, Shah argued that waiving the tax could encourage FPIs to make long-term allocations to Indian equities. The proposal follows increasing calls for tax relief for foreign portfolio investors (FPIs).
Finance Minister Nirmala Sitharaman recently hinted at potential changes to stock market taxation without confirming any specific revisions. Currently, long-term capital gains on listed equities held for over a year are taxed at 12.5%, while short-term gains are taxed at 20%. Shah noted that foreign investors have pulled over $28 billion from Indian equities this year, but overseas investment surged to over $5 billion in the past three weeks, aiding a market recovery of nearly 10%.
This recovery followed a decline in global artificial intelligence stocks and falling oil prices. Shah identified oil prices and global risk aversion as significant threats to Indian markets. He emphasized that consistent domestic investment could maintain stability during times of international uncertainty. Shah projected that mutual funds could annually invest $40 billion to $50 billion in equities, with insurance companies and pension funds adding another $20 billion to $25 billion.
He projected annual domestic institutional equity inflows of roughly $60 billion to $80 billion, presenting prospects for companies to raise capital via initial public offerings (IPOs). Edelweiss aims to list its asset management division within 18 to 24 months. The company manages assets worth around ₹1.8 lakh crore and includes US private equity firm WestBridge Capital as an investor.
Another group entity, EAAA India Alternatives, recently went public with a ₹1,200 crore IPO. Shah indicated that the group ultimately aims to list its underlying businesses, encompassing insurance and asset management operations.
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