‘Cutting a tax rate doesn’t lift returns’: Ridham Desai on whether an LTCG cut can bring FIIs back

Morgan Stanley India's managing director Ridham Desai suggests that cutting the long-term capital gains tax rate may not necessarily boost returns for investors. He believes that such a move could temporarily improve market sentiment, but it may not be enough to lure foreign investors back into the Indian equity market. The key factor, according to Desai, is the improvement in Indian equity returns and earnings, which would make the market more attractive to foreign investors.

Why it matters

A lower long-term capital gains tax may improve sentiment briefly, but foreign investors will return only when they see growth. The tax cut is not a primary driver of foreign investment decisions.

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