Foreign investors are disillusioned with the stock market: All selling records were broken in 2026, and the government is using a major tax to bring back FIIs FII Selling in 2026: Rs 400 crores are leaving the market every hour, the government made a big move to stop foreign guests!

The year 2026 is proving to be very challenging for the Indian stock market in terms of the attitude of foreign investors. Due to changing equations globally and attractiveness of other markets, foreign portfolio investors (FPIs/FIIs) are continuously withdrawing their money from the Indian market. The situation is that this year foreign investors are withdrawing money from the Indian stock market almost every hour. ₹400 crore They are withdrawing huge amounts of money, which has increased the concern of market analysts and policy makers.

Statistics speak: Sales doubled by 2025

If we compare with last year’s figures, this year’s picture looks very serious. Within the first 5 months of the year 2026, Foreign Institutional Investors (FIIs) have withdrawn approximately ₹2.25 lakh crore Net withdrawal has been made. This figure is more than double the total selling of ₹ 1.66 lakh crore in the entire year 2025. Due to such outflow of foreign funds, there is continuous pressure on the domestic stock market.

With the aim of stopping this rapid selling by foreign investors and encouraging them to remain in the Indian markets, the Government of India and the Reserve Bank of India (RBI) are now together preparing a major relief package or policy change.

Preparation to make changes in the tax system to attract foreign investors

According to a recent report by Bloomberg, the government is considering making the market-linked tax structure (tax system) more attractive and easy to deal with this all-round selling by foreign investors. The government believes that by reducing the cost of investment, foreign funds can be redirected back to India.

The major changes that are being discussed at the government and RBI levels are as follows:

• Possibility of LTCG tax cut: At present, foreign investors have to pay Short Term (STCG) and Long Term Capital Gains (LTCG) tax as well as Securities Transaction Tax (STT), which significantly increases the total cost of their investment. The government is planning to relax it.

• Tax relief on interest on bonds: To attract foreign investors to the Indian debt market, interest income from government bonds has been increased. heavy tax of 20% Can make big cuts.

• Removing bond ownership limits: The limit for purchasing government and corporate bonds can be made easier for foreign investors, so that they can make big investments without any hindrance.

• Reopening of Sovereign Bond Routes: The Reserve Bank can reopen the way for foreign investors to buy long-term government bonds. It is noteworthy that in the year 2024, the government ‘Fully Accessible Route – FAR’ of 14 years and 30 years for FIIs was removed from this list, which can now be brought back.

Health of rupee and impact on foreign exchange reserves

This exit of foreign investors from the market is not limited to the stock market only, but it is directly impacting the health of the Indian rupee. Due to continuous dollar withdrawal, the Indian Rupee is slipping towards its lower levels against the US Dollar.

The real objective of these new efforts of the government and RBI is to increase the liquidity (supply) of dollars in the market. When foreign investors, lured by tax exemption, will reinvest money in the Indian market and bonds, the inflow of foreign currency into the country will increase. This will not only remove the weakness of the rupee and strengthen it, but India’s foreign exchange reserves will also strengthen to record levels once again.