New Delhi, October 8: The government rolled back several measures announced in the budget with the hope that it will revive the economy. One important decision taken among all, was the rolling back of increased surcharge on foreign portfolio investors or FPIs. But after many months the decision to roll back FPI surcharge has not brought much relief for the government as of now.
Amid of fear of global recession and uncertainty foreign portfolio investors have sold equities worth Rs 3000 crore in just three trading sessions of October. The net investment by foreign portfolio investors in equities in September stood at Rs 7850 crore.
However, the situation seems to improve after the rate cut announced by RBI and a slew of measures taken by Securities Exchange Board of India. On October 4, the RBI cut benchmark repo rate by 25 basis points for the fifth time in a row bringing it at lowest level in the last decade.
In the last week of September, finance minister Nirmala Sitharaman, in a bid to revive the sagging economy, slashed the corporate tax by around 10 per cent points and also clarified that the enhanced tax surcharge will not apply on capital gains arising from sale of any security, including derivatives, in the hands of FPIs..
Besides, SEBI has simplified KYC requirements for FPIs and granted them permission to carry out market transfer of securities. The outflow in October is on ‘account of fears of a global recession, trade war and a slowdown in India. FPI inflow is expected to improve on expectations of good corporate earnings in third quarter but is likely to remain muted due to global economic and trade war concerns.
Now to see what would be the foreign portfolio investors’ reaction in future, after a slew of relief measure being announced by the government.