Modi Govt Reportedly Plans LTCG Relief For FPIs: Big Push To G-Secs Amid FII Selloff

In a major move aimed at attracting foreign capital, the Modi government has reportedly approved a proposal to abolish long-term capital gains tax on Foreign Portfolio Investors (FPIs) investing in Indian Government Securities (G-Secs). According to multiple reports, the Cabinet has cleared an ordinance to amend the Income Tax Act, potentially removing the current 12.5% LTCG tax and even the 20% withholding tax on interest earned from government bonds. The development comes at a time when foreign investors have pulled out more than ₹3 lakh crore from Indian markets in 2026, while geopolitical tensions, rising crude oil prices and pressure on the rupee continue to challenge the economy. Why is the government targeting G-Secs instead of equities? How could this impact foreign investment flows, government borrowing costs and the rupee? Watch this detailed report for all the key details and expert views.