The massive capital outflow has significantly contributed to the depreciation in the Indian rupee, which breached the 79 per dollar mark recently.
With the investments in Aug, the net FPI investment in the equities segment in 2021 now stands at Rs 54,037 cr.
As the coronavirus pandemic is triggering fears of a global recession, foreign investors have started rowing back from the Indian capital markets by withdrawing a massive over Rs 1 lakh crore in March after remaining net buyers for six consecutive months.
Foreign portfolio investors (FPI) have pulled out over Rs 1 lakh crore from the Indian capital markets in March so far amid heightened fears of a coronavirus-induced global recession. Experts believe, foreign investors are withdrawing from riskier assets and are opting for safe heavens like dollar-denominated asset classes and gold.
Overseas investors invested only Rs 6,554 crore in Indian markets on a net basis in February, as they adopted a cautious stance amid coronavirus scare, subdued economic data, and disappointing corporate earnings.
The government plans to increase investment limit of foreign portfolio investors (FPI) in corporate bonds from 9 per cent to 15 per cent, Finance Minister Nirmala Sitharaman said on Saturday.
Budget 2020 announcement: Finance Minister Nirmala Sitharaman on Saturday proposed to increase the investment limit of FPIs in corporate bonds from 9 per cent to 15 per cent.
According to the latest depositories data, foreign portfolio investors (FPIs) withdrew a net amount of Rs 17,592.28 crore from equities and pumped in a net sum of Rs 11,672.26 crore in the debt segment, translating into a total net outflow of Rs 5,920.02 crore during August 1 - 30.
This differential regime existed even prior to the 2019 Budget, the Central Board of Direct Taxes (CBDT) said, adding that it was, therefore, not the creation of the Finance (No 2) Act, 2019, or the announcement made by the Finance Ministry last week.
Seeking to make India more attractive FDI destination globally, Sitharaman had said that government would examine suggestions of further opening up of FDI in aviation, media (animation) and insurance sectors in consultation with all stakeholders.
Tax experts said that the clarification has watered down the expected benefits of the government announcement and can make return-filing very complicated. One of them said that the structure is very "ridiculously worked out" as it makes things very complex.
The government on Saturday clarified that enhanced surcharge has been withdrawn for foreign portfolio investors on capital gains in both the equity and derivatives segments.
The rollback comes after Indian capital markets witnessed massive outflow of foreign funds in the month of July.
There has been only four occasions since 2002, when the FPI outflow had surpassed the Rs 11,743-crore-mark witnessed in July so far, all at a time of tight financial circumstances.
As per the latest depositories data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 4,953.77 crore from equities during July 1-12, but poured in a net Rs 8,504.78 crore into the debt market, translating into a cumulative net investment of Rs 3,551.01 crore.
There were concerns that the increased surcharge on super-rich could also affect foreign funds investing in India since a same tax structures apply for individuals, Hindu Undivided Family and Associations of Persons (AoPs).
According to data available with the depositories, FPIs withdrew a net amount of Rs 5,880 crore during January 1-25
According to data available with the depositories, FPIs withdrew a net amount of Rs 3,677 crore from equities during January 1-12.
This was the worst year for Indian capital markets in terms of overseas investment since 2002, the last year for which segregated FPI data for equity and debt markets are available.
FPIs have been net sellers almost throughout this year barring some months such as January, March, July and August.
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