Industry backs RBI, govt measures to support rupee, attract long-term capital

New Delhi: Industry body ASSOCHAM on Monday backed recent measures taken by the Reserve Bank of India (RBI) and the Finance Ministry to support the rupee and strengthen investor confidence, saying policymakers were pursuing the right approach to attract durable foreign capital flows.

Commenting on recent volatility in the rupee and foreign portfolio investor (FPI) flows, ASSOCHAM President Nirmal K. Minda said the industry chamber appreciated the coordinated actions of the RBI and the government to maintain macroeconomic stability amid global uncertainty.

His remarks came in response to former RBI Governor D. Subbarao's recent observations that the rupee's long-term strength would ultimately depend on India's ability to attract sustained capital flows backed by strong economic fundamentals.

"We fully align with Dr. Subbarao's emphasis on durable flows based on fundamentals, and note with appreciation the steps already taken by the government and the RBI," Minda said.

The industry body said these actions had helped the rupee recover from recent lows and pointed to the successful completion of the $133 billion FCNR(B) mobilisation window that closed on August 31.

ASSOCHAM Chief Economist S.P. Sharma said India's macroeconomic fundamentals remained strong, citing healthy foreign exchange reserves, the RBI's projected GDP growth of 7.1 per cent for FY27 and efforts to keep inflation under control through calibrated monetary tightening.

The chamber also welcomed recent measures announced by the Finance Ministry to attract long-term foreign investment.

Among them was the Income-tax Amendment Ordinance, 2026 which exempts FPI investments in government securities from taxes on interest income and capital gains with effect from April 1, 2026.

Apart from that, the industry also welcomed Finance Minister Nirmala Sitharaman's recent indication that investor feedback on long-term capital gains tax (LTCG) and securities transaction tax (STT) would be considered as part of consultations for the 2027-28 Budget.

However, the industry called for continued tax rationalisation, simpler interpretation of tax provisions and consideration of measures that incentivise longer-term equity investment over short-term capital flows.

The industry body said it would continue working with the government, RBI and market regulator SEBI to strengthen India's appeal as a destination for long-term global capital.

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