Indian government to rollback higher surcharge on foreign portfolio investors

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India’s Finance Minister Nirmala Sitharaman arrives at her office before leaving for parliament to present the federal budget in New Delhi, India, July 5, 2019. REUTERS/Anushree Fadnavis

NEW DELHI (Reuters) – The Indian government announced measures on Friday to revive economic growth and markets including the withdrawal of higher taxes for foreign portfolio investors (FPIs) and said it would release funds for bank recapitalisation upfront.

Finance Minister Nirmala Sitharaman told reporters the government had decided to withdraw the surcharge on FPIs which she had unveiled in her budget for the fiscal year ending March 2020.

The higher tax applied to individuals and FPIs earning more than 20 million rupees annually which led to a sharp fall of Indian equity markets.

FPIs have pulled out over $1 billion in August from the Indian markets.

The government hopes the new measures will improve the sentiment leading to higher private investment and assuage concerns of portfolio investors, to revive economic growth of Asia’s third largest economy from a five year low.

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