It streamlined the declaration requirements for FPIs in line with recent policy announcements to attract foreign capital inflows into the debt market and reverse the rupee’s fall in recent months, experts said.
In the revised form notified by the Department of Economic Affairs (DEA), the category “Investment exclusively in Government Securities” has been introduced under the subhead “FPI Registration Information”.
He also fended off some chiefs seeking further details of the businesses of the foreign investors and whether they were known by any names other than those disclosed by them. However, most other requirements are retained.
The latest form replaces the form proposed on January 27, 2020, the DEA said in the notification.
The revised form comes a week after the government exempted foreign investors from capital gains and withholding tax on their holdings of government securities and also expanded the investable pool of long-term papers.
Foreign portfolio investors (FPIs) faced 12.5% long-term capital gains (LTCG) tax on listed shares and bonds and 20% withholding tax on interest earned on G-Secs.
The government brought an ordinance on June 5 to abolish this levy. It has also added G-Secs in 15, 30 and 40 years tenure as well as sovereign green bonds to the list of specified securities under fully accessible route for investment by FPIs. Earlier, the facility was available only for papers with a tenure of up to 10 years.
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