New Delhi, Oct 19: Commenting on the recent volatility in the rupee and FPI flows, ASSOCHAM President Sh. Nirmal k Minda said, ASSOCHAM appreciates the coordinated and timely measures taken by the Reserve Bank of India and the Ministry of Finance to ensure macro-economic stability and strengthen investor confidence amid global volatility.
Reacting to former RBI Governor Dr. D. Subbarao's observation that the rupee will ultimately find strength when India attracts durable capital flows based on fundamentals, Mr. Minda said, The Government and RBI are already moving in the right direction and ASSOCHAM fully aligns with this approach.
Dr. Subbarao, who served as Governor from 2008 to 2013, has noted that the RBI should allow the rupee to find its level while managing its trajectory. He has also highlighted the importance of listening to global investors who seek greater predictability.
Mr. Minda said, We fully align with Dr. Subbarao's emphasis on durable flows based on fundamentals, and we note with appreciation the steps already taken:
1. RBI's Proactive Package: The recent measures including the special USD window for public sector oil marketing companies, the Foreign Exchange Risk Reserve, tightening of forex derivative norms, OMO operations and the higher CRR requirement have helped the rupee recover nearly 2 percent from its recent lows. The successful handling of the 133 billion dollar FCNR(B) mobilisation window that closed on August 31 is commendable, Dr. Sharma noted.
2. Strong Fundamentals: With forex reserves at a healthy level, GDP growth projected at 7.1 percent by RBI for FY27, and inflation being actively managed with a calibrated tightening stance, India's fundamentals remain strong, he added.
3. Finance Ministry's Positive Signals: ASSOCHAM warmly welcomes the Finance Ministry's investor-friendly steps:
The Income-tax Amendment Ordinance, 2026 which has exempted FPI investments in Government Securities from tax on interest and capital gains with effect from April 1, 2026, Sh. Saurabh Sanyal, Secretary General ASSOCHAM said, This forward-looking move will attract stable, long-term capital from pension funds, sovereign wealth funds and insurance companies.
The statement by Hon'ble Finance Minister Smt. Nirmala Sitharaman at the Bloomberg New Economy Forum on 13th October 2026 that the Government is keen to hear investor views on LTCG and STT as part of Budget 2027-28 consultations. Sh Sanyal said, This consultative approach is highly reassuring for global investors and shows the Government's commitment to making India's tax regime more competitive.
Going Forward: Strengthening Durable Flows
Noting that FPI flows have been volatile globally due to high US bond yields, elevated crude prices and rotation of capital towards AI and technology themes, Dr. S P Sharma, Chief Economist ASSOCHAM suggested the following for consideration to further anchor durable flows:
Continue the good work of tax rationalisation to enhance India's competitiveness and align with global best practices.
Consider the constructive suggestion made by SBI Research Ecowrap to anchor long-term equity flows by extending the definition of long-term holding to 2-3 years and providing suitable incentives for such durable investments, as against short-term hot money.
Further simplify and standardise the interpretation of tax provisions to build long-term investor confidence.
Dr. S P Sharma concluded, ASSOCHAM and its members stand fully committed to working with the Government, RBI and SEBI to make India the most preferred destination for long-term global capital and to realize the vision of Viksit Bharat.
