Foreign Portfolio Investor Survey 2016-17

India moving in the right direction

  • 67%

    thinks India is a preferred foreign portfolio investment destination among emerging markets

  • 71%

    rate India’s trade and settlement process as either “Great” or “Good”

  • 73%

    of the investors would prefer direct access to the Indian market over ODIs

  • 63%

    think that tax rates on capital gains are reasonable in India

  • 67%

    are not satisfied with the time taken to complete the tax audit for a financial year

Overview of the survey

In this first edition of the Foreign Portfolio Investor Survey 2016-17, we have summarised feedback from over 200 participants with respect to India's investment climate in general and its tax and regulatory environment, in particular. 

The survey results highlight the success till date and the challenges that lie ahead for the government.

With this survey, we want to add to our collective understanding about Indian capital markets and India’s investment, tax and regulatory environment.


Key messages

  • Ashish Chauhan

    Investors are happy with the regulator’s responses to queries and the trade and settlement process

    "India has always been at the forefront of settlement changes—with measures like, interoperability among depositories, T+2 settlement cycle, robust risk and default management practices, mandatory CCP clearing for exchange traded products, among others. Interoperability of clearing corporations is the next reform in the pipeline which would further revolutionise the post-trade structure in India and increase the competitiveness and attractiveness of India as an investment destination."

    Ashish Chauhan
    Managing Director and Chief Executive Officer, BSE

  • Sunil Gidwani

    Investment limits are reasonable

    "While the investment limits in equity are adequate, there is scope for increasing the FPI investment limits in government debt securities. Currently, FPIs are unable to participate in primary auction of government debt securities, since they would need to bring the entire bid amount to India and repatriate the funds in case of partial or nil allotment. A model where FPIs can bring the margin on bid day and the entire consideration post confirmation of allotment of bid through the stock exchange/clearing corporation mechanism may be considered."

    Sunil Gidwani
    Partner, PwC India

  • Puneet Arora

    Investors prefer to invest directly as against investing through access products

    "Investors across the world commonly use access products to invest in capital markets. The focus of the regulators in the country of investment is to have sufficient safeguards to ensure that these access products are not used for money laundering or tax evasion. India’s concerns and measures being adopted to restrict use of access products may be overstated and overly burdensome. These concerns and measures need to be balanced with the need for ease of doing business in India."

    Puneet Arora
    International Tax Services Partner, PwC US

  • Timothy McManus

    Tax audits are satisfactory, though time taken can reduce

    "We remain comfortable with the way tax audits have been conducted in the past few years. The Government's effort in bringing the Minimum Alternate Tax controversy to a closure is commendable. We believe there exists scope for further improvements in tax administration and we will continue to engage actively where appropriate."

    Timothy McManus
    Fund and Securities Tax Manager, First State Investments

  • Rakesh Vengayil

    Outcome of the MAT controversy is satisfactory

    "The government has dealt with this issue in a relatively fast-track manner. It has shown commitment to its stated principles such as certainty of taxation and avoidance of retroactive taxation. We are impressed with the way the government approached this issue by periodically communicating with the stakeholders, engaging subject matter experts and constituting a special committee, all of which enabled a rationalised outcome. This reinforced the fact that foreign investors can invest in India with confidence."

    Rakesh Vengayil
    Chief Operating Officer, BNP Paribas

  • "India’s attractiveness for a portfolio investor closely mirrors its attractiveness as a business destination. As the quality of businesses and the business environment have improved over the past 25 years, it has become very tough for serious global investors to ignore India. The continued independence and transparency of RBI and SEBI have also helped bolster investor sentiment towards India. We hope India continues to pursue structural reforms which will improve the well-being of its billion plus citizens, and in turn, further enhance its appeal as a business and investment destination."

    - Founder and CEO of $2.3 billion India focused fund


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Contact us

Gautam Mehra
Tax and Regulatory Leader
Tel: +91 22 6689 1155
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Bhavin Shah
Leader, Financial Services Tax
Tel: +91 22 6689 1122
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Sunil Gidwani
Partner
Tel: +91 22 6119 8052
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Suresh V Swamy
Partner
Tel: +91 22 6119 8053
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Nehal Sampat
Executive Director
Tel: +91 22 6119 8567
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