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India Must Rethink Overseas Capital Taxation Amid Rupee Depreciation Says Trifecta Rahul Khanna
M
Moneycontrol•19-10-2026, 14:36
India Must Rethink Overseas Capital Taxation Amid Rupee Depreciation Says Trifecta Rahul Khanna
- •Trifecta Capital co-founder Rahul Khanna warns that sharp rupee depreciation over the past two years has spooked foreign investors and hurt India's appeal for global capital.
- •Khanna advocates for currency-adjusted taxation so international investors are taxed on their actual dollar-denominated gains rather than inflated rupee returns.
- •High hedging costs and withholding taxes, such as a 12.5 percent drag on international endowments, create additional hurdles for foreign capital.
- •India faces stiff competition for global funds as lucrative domestic private-credit opportunities in the US make emerging market investments less compelling.
- •Trifecta Capital is targeting the final close of its fourth venture debt fund with a target corpus of Rs 1,500 crore in the coming months.
Key Questions Answered
Rahul Khanna proposed that India should tax foreign investors on a currency-adjusted basis to account for rupee depreciation rather than taxing returns that do not properly reflect currency losses, aligning practices with international standards.
Most overseas investors do not hedge their currency exposure because hedging costs have historically been prohibitive, leading them to report gains in rupee terms even when their actual dollar-denominated returns are much lower.
Trifecta Capital is targeting the final close of its fourth venture debt fund within three to four months, with a target corpus of Rs 1,500 crore and a greenshoe option of Rs 500 crore, having completed its first close in early 2025.
