PHDCCI President Anil Gupta has called for a review of capital gains and transaction taxes to stem the heavy withdrawal of foreign capital from the Indian market. With FPIs pulling out nearly ₹3 lakh crore in 2026, the industry body argues that fiscal incentives are crucial to maintain market stability amid rising US bond yields.
Anil Gupta, President of the PHD Chamber of Commerce and Industry (PHDCCI), has urged the central government to implement investor-friendly tax reforms to stabilize domestic markets. The chamber is advocating for a rationalization of long-term and short-term capital gains taxes, as well as the Securities Transaction Tax (STT), to improve post-tax returns for investors. This appeal comes at a time when Foreign Portfolio Investors (FPIs) have consistently reduced their holdings in Indian equities.
Data from 2026 shows a challenging environment for Indian markets, with cumulative FPI outflows exceeding ₹2.95 lakh crore. In October alone, FPIs withdrew ₹34,843 crore, a trend largely driven by high US bond yields, which have hovered between 5.5% and 6%. For international investors, these yields offer a competitive and safer alternative to emerging market equities, leading to a shift in global capital allocation.
Beyond fiscal policy, the PHDCCI has highlighted the need for structural improvements to support India's long-term economic objectives, including the goal of Viksit Bharat by 2047. Gupta, who also serves as the Chairman and Managing Director of KEI Industries, emphasized that state-level cooperation is essential. The chamber has recommended that state governments focus on simplifying land acquisition processes, enhancing labor mobility, and improving power infrastructure. These steps are viewed as critical to reducing project delays and lowering capital expenditure for manufacturers.
Logistics also remains a key area of concern for the industry. While the government has significantly expanded expressways and airport networks, industry leaders suggest that increasing inland container depots could further bridge the gap between industrial clusters and major ports. Such improvements are considered vital for reducing input costs, which have been under pressure due to elevated energy prices and inflation.
For investors, the situation underscores the ongoing tug-of-war between strong domestic growth narratives and global macroeconomic pressures. While domestic institutional investors have helped cushion the impact of foreign selling, the volatility linked to FPI flows remains a significant monitorable. Market stability will likely depend on how the government addresses these tax and structural concerns in the upcoming budget cycle. Investors should track policy updates related to capital gains and government spending, as these will be key indicators of the state's approach to balancing fiscal discipline with the need to attract global capital.