India's long-term capital gains tax on equities, reintroduced in 2018 after a decade-long absence, has quietly become one of the most contentious policy levers affecting foreign portfolio flows. Aditya Shah, Founder of Hercules Advisors, says the government can no longer afford to sit on the fence: a complete removal of LTCG for foreign investors is the only credible signal that will bring FPIs back.
"If you want foreigners to come and invest in India, you cannot have a taxation format which is much different from any other country around the world," says Shah.
