After foreign portfolio investors (FPIs) withdrew ₹35,861 crore from Indian equities in September, Emkay Global Financial Services chief economist Madhavi Arora proposed a cash-trade tax cut to reduce dealing costs.
National Securities Depository Ltd. (NSDL) data break the net outflow into ₹14,116 crore for Sept. 1-15 and ₹21,745 crore for Sept. 16-30. The figures record the withdrawals but do not establish that transaction taxes caused them.
In an interview published by Mint on Oct. 23, Arora favored reducing securities transaction tax (STT) on cash-market trades while keeping the long-term capital gains (LTCG) framework unchanged. She said a lower charge “would lower friction,” linking the proposal to market liquidity and how international investors assess Indian equities. It was her policy recommendation, not an announced government measure.
Arora also said foreign investment decisions reflect a range of conditions, including company earnings, valuations, currency moves, oil prices, U.S. yields and domestic policy.
India currently applies both transaction and capital-gains taxes to qualifying share activity. The Income Tax Department says listed-equity LTCG is taxed at 12.5% when annual gains exceed ₹1.25 lakh in total, for qualifying transfers from July 23, 2024, when applicable STT conditions are met. The National Stock Exchange of India (NSE) schedule, effective Apr. 1, 2026, sets delivery-based STT at 0.1% for buyers on purchases and 0.1% for sellers on sales.
That differs from the approach set out in the 2004 Union Budget speech, which proposed a 0.15% transaction levy alongside removing LTCG tax on securities.
Arora cited the Nifty 50's sector mix in discussing India's “anti-AI” label. NSE Indices' Sept. 30, 2026, factsheet assigns 37.45% of the index to financial services and 7.52% to information technology; those weights do not measure companies' direct exposure to AI hardware. The International Monetary Fund's October 2026 regional outlook projects India's economy will grow 7.0% in 2026, compared with 4.5% for China.
