FM Sitharaman acknowledges foreign investor anxiety, says she will consider voices seeking tax changes before Budget

Union Finance Minister Nirmala Sitharaman has indicated that she will consider the rising calls for tax changes to support equity markets, acknowledging the anxiety among retail investors and market participants amid net foreign investor outflows.

Speaking at the Financial Express Leadership Awards 2026 in Mumbai, she was asked whether the upcoming Budget would create a favourable environment for foreign investors and roll out the red carpet for dollar investments. She said taxation was only one part of the picture.

Also read: India's economic pillars show 'no fragility', says Finance Minister Nirmala Sitharaman


“Taxation is just one part of it, but I quite appreciate and also realise the sensitivity and the anxiety which is prevailing among retail investors and also among equity participants,” she said.

Sitharaman pointed out that the tax structure was the same in 2023-24, when India saw its highest inflows. “The taxation was similar even then. Nothing differently was done for drawing investments,” she said.

She said the situation was very different now. “Circumstances have changed. Challenges have grown. More net FII outflows have happened,” she said. She added that flows have started resuming and investors are coming back.

“So I know that circumstances have changed and therefore voices of concern are louder. I quite appreciate that. I’ll consider all this,” the Finance Minister said.

She linked the issue to growth, saying India needs capital to sustain growth of over 7 per cent. “In order to keep that intact, we need capital,” she said. She also recognised the need for equity markets to get support similar to what debt markets receive.

Sitharaman did not go into specifics on any possible changes. “I wouldn’t want to say more at this stage, but I recognise the voice,” she said.

Budget and leadership

Speaking about the responsibility that comes with the Budget, the Finance Minister said every Budget brings new challenges. “Every Budget comes with new challenges and an overwhelming responsibility to deliver for the people and India’s growth,” she said.

She said the people of India had responded positively to the government’s policies since her first Budget in July 2019. “Since my first Budget in July 2019, the people of India have responded positively to our policies,” she said.

Sitharaman also praised Prime Minister Narendra Modi’s leadership. She said he had provided stability in leadership despite the odds. “Consistency has been his virtue,” she said.

Call to speak with confidence

Separately, speaking at HSBC India’s Third Annual Financial Inclusion Gathering on Monday, in a conversation with HSBC India CEO Hitendra Dave, Sitharaman said India’s key economic indicators showed no signs of fragility. She cited strong GST collections and a sound banking sector.

She said even informed voices sometimes expressed scepticism about India’s economic outlook and urged citizens to speak with greater confidence about growth. “We will have to speak with a lot of confidence about India. That is my request,” she said.

Capex and fiscal prudence

The Finance Minister said capital expenditure was an important part of the growth strategy, as the government needs to push investment until the private sector comes in to expand or set up capacities. “It’s important for the government to push through with the capital expenditure,” she said.

She said public investment would continue to support growth, but stressed the need for responsible spending. “We need to be fiscally prudent,” she said. “Under Prime Minister Modi, fiscal prudence will be top priority,” she added.

The government would have to balance fiscal discipline with the need to sustain public investment and support growth, she said.

Welfare, credit and jobs

On welfare spending, Sitharaman said schemes covering food security, housing, sanitation, drinking water and health insurance had improved access to basic services. Citing a World Bank report, she said India’s poverty level had fallen to 2 per cent by the end of FY23 from around 25 per cent. She attributed the decline to welfare delivery, financial inclusion and access to essential services.

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She said credit, insurance and pensions would be key to the next phase of financial inclusion. She reiterated the government’s target of insurance coverage for all by 2047 and stressed the need for easier access to credit for people looking to start or expand businesses.

On employment, she said the government wanted every district to have centres equipped to provide AI training. The aim is to prepare young people for AI-enabled jobs and bridge the gap between industry requirements and graduates’ skills.

She also said a recently announced high-level committee would consult industry representatives and experts before recommending changes to the banking system to support the Viksit Bharat vision.