MUMBAI — Finance Minister Nirmala Sitharaman said on Monday that the government would listen to concerns raised by foreign portfolio investors (FPIs) about India's capital gains tax regime before deciding on any course of action, and acknowledged that changing market conditions and foreign investment outflows had intensified calls for a reassessment of the tax structure, IANS reported. 'The taxation structure was what it is today even in 2023, when inflows were at record highs. Today, the circumstances have changed. FII outflows have happened, and voices of concern are louder. I will consider all this,' she said at the Financial Express Leadership Awards in Mumbai.

Source: IANS — Will assess FPI demands on LTCG tax; expects Tata Trusts-Tata Sons issues to be settled amicably, says FM Sitharaman

'Taxation is just one part of it. I quite appreciate and realise the sensitivity and anxiety prevailing among retail investors and equity market participants,' Sitharaman said, according to Business Standard. She stressed that India needs capital and equity to sustain growth of over 7 per cent: 'At a time when our growth is very important, and people are putting their very best to ensure that we sustain growth of over 7 per cent, we need capital and equity particularly now.' Bloomberg also reported that she said she would consider the tax concerns, without specifying whether the government was considering changes to capital gains tax.

Source: Business Standard via India Press Agency — Equity Capital Vital, Market's Concerns Merit Attention: FM

Why investors are pressing for a change

The minister's remarks come amid a growing clamour for a cut in LTCG tax. SEBI has reportedly recommended that the government scrap the tax on foreign investors' equity gains and give domestic mutual fund investors relief when switching schemes, Reuters reported on November 2. Economists at the State Bank of India have also proposed scrapping the LTCG tax on equity investments to encourage investors to remain invested for longer periods, Informist reported. Informist put foreign portfolio outflows at Rs 3.08 trillion from Indian equities in the first nine months of calendar 2026, nearly double the Rs 1.66 trillion withdrawn in all of 2025 — a different measuring period from the Business Standard fiscal-year figure above.

Source: Informist — Will consider all factors to address equity investors' anxieties: Sitharaman

Sitharaman, however, stopped short of promising any reduction. She noted that the government made no tax changes to draw foreign investment in 2023-24, when India saw record inflows, and that foreign investors had begun returning in the past two weeks. A few weeks earlier she had said she would keenly listen to discussions on LTCG tax and the securities transaction tax (STT) on equities, Business Standard reported. Her position, as reported, is that the concerns will be weighed — not that a cut has been decided.

Source: Business Standard via India Press Agency — Equity Capital Vital, Market's Concerns Merit Attention: FM

Tata differences 'have to be amicably settled'

At the same event, Sitharaman expressed confidence that the issues within the Tata Group, including differences over the re-appointment of its chairman and the proposed listing of Tata Sons, would be resolved amicably through internal discussions rather than public disagreements, IANS reported. 'I know the brand value of Tata, the contribution of the Parsee community to make Tata a huge global brand. I also know the expanse of activities in which Tatas are invested. So this is a very critical component to the Indian economy and therefore it has to be amicably settled between themselves,' she said, urging stakeholders to restore normalcy at the earliest.

Source: IANS — Will assess FPI demands on LTCG tax; expects Tata Trusts-Tata Sons issues to be settled amicably, says FM Sitharaman

What happens next: the LTCG question now sits with the Finance Ministry's pre-Budget process ahead of the Union Budget scheduled for February. SEBI's recommendations, the SBI economists' proposal and investor representations are all inputs to that process; until the Budget, the 12.5 per cent LTCG rate and the 20 per cent short-term rate on listed equity remain unchanged.