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Finance Minister Nirmala Sitharaman Addresses Indian Equity Challenges And Capital Outflows
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Moneycontrol•19-10-2026, 14:31
Finance Minister Nirmala Sitharaman Addresses Indian Equity Challenges And Capital Outflows
- •Finance Minister Nirmala Sitharaman highlighted that global capital is aggressively chasing artificial intelligence and US markets, leading foreign investors to pull over $33 billion from Indian equities this year.
- •Sitharaman noted that high liquidity and a booming primary market have made it very easy for foreign investors, private equity funds, and multinationals to exit their investments.
- •Data shows significant capital shifting to Taiwan and Korea due to their major exposure to AI, causing India's share in the MSCI Asia Pacific ex-Japan index to shrink.
- •The Finance Minister called for a healthy discussion regarding equity taxes, as proposals like abolishing the long-term capital gains tax could potentially bring back traders.
- •Recent reports indicate that a large portion of funds raised through Indian IPOs between 2021 and 2025 were withdrawn through offers for sale, with retail and mutual funds buying shares from existing insiders.
Key Questions Answered
Finance Minister Nirmala Sitharaman explained that Indian equities have faced struggles due to capital chasing artificial intelligence elsewhere, liquidity making exits too easy, and ongoing debates surrounding equity taxation.
Foreign portfolio investors (FPIs) have sold more than $33 billion worth of direct Indian equities over the course of the year.
SBI Research has proposed abolishing the long-term capital gains (LTCG) tax on equity while extending the required holding period to two or three years.
