Former Niti Aayog CEO Amitabh Kant has called for the removal of retrospective taxation to improve investor confidence in India. He highlighted that policy stability is essential to attract the foreign capital needed to reach long-term economic growth targets. This comes as India seeks to maintain a steady increase in foreign direct investment after recent volatility.
Detailed Coverage
Amitabh Kant, former CEO of Niti Aayog and current senior advisor at Fairfax Financial Holdings, has highlighted the critical need for tax policy reform to support India's long-term economic goals. Kant argued that retrospective taxation—where tax laws are applied to past transactions—remains a significant hurdle for global investors. By creating uncertainty, such policies can deter the influx of capital required for large-scale national development.
The Impact of Tax Certainty on Investment
Kant emphasized that India must project an image of being a welcoming destination for businesses. He noted that the government should prioritize policy stability to ensure consistent inflows of foreign direct investment. According to Kant, domestic savings alone are not enough to lift the country's investment rate to the targeted 40% of GDP, a level he believes is necessary to sustain a 9% economic growth rate over the next three decades. To provide this clarity, he suggested implementing a 60-day limit for advance tax rulings, which are legally binding decisions on specific business transactions.
Past Legal Precedents and Investor Perception
During his commentary, Kant specifically pointed to the case involving Tiger Global as an example of how past tax disputes shape market sentiment. In January 2026, the Supreme Court of India ruled that capital gains from the sale of Tiger Global’s stake in Flipkart to Walmart in 2018 were taxable within India. The court determined that the transactions were structured in a way that amounted to impermissible tax avoidance. While such rulings empower tax authorities to scrutinize past deals, observers in the investment community often cite the resulting unpredictability as a point of concern for international firms planning long-term capital allocation in the country.
Recent Trends in Foreign Investment
Data on capital inflows indicates a shifting environment. Net foreign direct investment into India reached $7.7 billion in 2025-26, representing a recovery from the $0.95 billion recorded in the previous fiscal year. While this rebound suggests improving sentiment, the broader debate over tax structure continues to be a central theme for policy analysts and global stakeholders. Moving forward, the key monitorable for investors will be any potential government reforms regarding the advance ruling process and further clarifications on tax dispute mechanisms, which could provide the predictability that multinational investors look for when entering the Indian market.