Union Budget 2026: Policy Steps to Stabilize FPI Flows

India’s equity markets have faced significant foreign portfolio investor (FPI) outflows, raising concerns about capital stability. To address this, the government is expected to announce calibrated steps in the upcoming Union Budget. These measures are designed to attract long-term institutional investors, strengthen market resilience, and align India’s capital markets with global best practices.

Key Highlights

• Tax Concessions: Pension and endowment funds may receive long-term capital gains (LTCG) waivers to encourage sustained investments.
• Relaxed Limits: Portfolio investment caps could be eased, reducing barriers for foreign investors.
• Regulatory Easing: Certain macro-prudential norms may be streamlined to remove redundant restrictions.
• Market Impact: These steps aim to reverse the $19 billion equity outflow recorded in 2025.
• Strategic Goal: Reinforce India’s position as a stable, attractive destination for global capital inflows.

Sources: Financial Express, Firstpost, Moneycontrol