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

India’s Finance Minister Nirmala Sitharaman clarified that the recent capital gains tax relief for government securities (G-Secs) is not the final step in expanding the country’s bond market. She stressed that deeper foreign capital inflows are essential to support India’s growing economy, particularly as the government and Reserve Bank of India (RBI) assess tax structures to attract global investors. The move follows India’s inclusion of government bonds in major global indices, which is expected to boost liquidity, reduce borrowing costs, and strengthen financial markets. However, Sitharaman cautioned that global uncertainties—including crude oil supply disruptions and geopolitical tensions—could impact energy prices and inflation. Domestic factors, such as the monsoon’s progress, remain critical for food prices and rural demand, with favorable conditions potentially easing inflationary pressures. The government is also prioritizing economic partnerships with Gulf Cooperation Council (GCC) countries to secure long-term investments and enhance trade ties. With India targeting higher growth and increased infrastructure spending, policymakers view deeper capital markets and stronger foreign investment as key drivers for future economic expansion. Additional measures may follow to further improve the attractiveness of Indian bonds for overseas investors.