Market experts have expressed concerns about the recent increase in long-term capital gains tax, suggesting that it could discourage foreign institutional investors (FIIs) from investing in Indian equities.

They argue that this tax burden puts FIIs at a disadvantage and hampers the participation of domestic investors in the market.

It is noted that India heavily relies on foreign capital, with most private equity ventures being funded by foreign investments.

The lack of sufficient risk capital in the country is seen as a hindrance to achieving meaningful economic change.

The impact of capital gains tax on market performance is highlighted, with the observation that post-tax returns reveal a different reality compared to pre-tax returns.

Over a 20-25 year period, returns in the US and Indian markets are said to be comparable when adjusted for taxes.