Tax Cuts won't bring back FIIs.
Ridham Desai: LTCG Tax Cut Alone Won’t Bring FIIs Back; Earnings Growth and Equity Returns Are Key
Morgan Stanley India MD Ridham Desai says cutting India’s 12.5% LTCG tax may provide a short-term sentiment boost, but it is unlikely to trigger a sustained return of foreign investors.
His key point is that tax rates do not determine investment returns. FIIs will return when Indian equities offer a more attractive combination of earnings growth, valuations, currency stability and relative returns versus other global markets.
Desai says India’s current problem is that equity returns and earnings momentum are not accelerating, while markets linked to the global AI cycle have offered stronger returns. Consequently, global investors can deploy capital elsewhere.











