Capital gains tax relief for G-Secs not end of story, more foreign capital needed: FM Sitharaman – Firstpost

Finance Minister Nirmala Sitharaman has said that the recent capital gains tax relief for government securities (G-Secs) is not the final step in India’s efforts to deepen its bond market, stressing that the country needs stronger foreign capital inflows to support its growing economy.

Speaking on efforts to attract global investors into Indian debt markets, Sitharaman said the government and the Reserve Bank of India (RBI) have closely examined issues around capital gains tax and withholding tax structures. She indicated that more measures could follow as policymakers work towards making Indian bonds more attractive for overseas investors.

The remarks come as India seeks to expand foreign participation in its sovereign debt market after the inclusion of Indian government bonds in major global bond indices. Greater overseas investment is expected to improve liquidity, lower borrowing costs and strengthen India’s financial markets.

However, the Finance Minister cautioned that global uncertainties remain a key concern. She highlighted risks linked to crude oil transportation and supply disruptions amid geopolitical tensions, which could affect energy prices and inflation.

Sitharaman also pointed to domestic factors such as the progress of the monsoon, which remains crucial for food prices and rural demand. A favourable monsoon could help contain inflationary pressures and support broader economic growth.

The government is also focusing on strengthening economic partnerships with Gulf Cooperation Council (GCC) countries as part of its strategy to attract long-term investments and boost trade ties.

With India targeting higher growth and increased infrastructure spending, policymakers are looking at deeper capital markets and stronger foreign investment participation as critical drivers for the next phase of economic expansion.