Foreign
investors have pulled out almost Rs 6,000 crore (USD 962 million) from the
Indian debt market in a fortnight amid lack of clarity over tax norms for
returns on such investments and weakness in the rupee.
Since June, foreign institutional investors (FIIs) have withdrawn more than Rs 51,000 crore from the debt market, according to Sebidata. In the first five months of 2013, their net investment was almost Rs 25,000 crore.
During August 1-16, FIIs were gross buyers of debt worth Rs 5,257 crore, while they sold Rs 11,150 crore of bonds, translating into a net outflow of Rs 5,894 crore. Overseas investors infused a net Rs 1,601 crore (USD 262 million) in the stock market during this period.
Many FIIs are holding back their investments in Indian debentures due to lack of clarity on whether such instruments would attract lower withholding tax allowed by the government in May for bonds. It is unclear whether debentures are eligible for the lower withholding and this is resulting in holding back of investments in Indian debt.
Since June, foreign institutional investors (FIIs) have withdrawn more than Rs 51,000 crore from the debt market, according to Sebidata. In the first five months of 2013, their net investment was almost Rs 25,000 crore.
During August 1-16, FIIs were gross buyers of debt worth Rs 5,257 crore, while they sold Rs 11,150 crore of bonds, translating into a net outflow of Rs 5,894 crore. Overseas investors infused a net Rs 1,601 crore (USD 262 million) in the stock market during this period.
Many FIIs are holding back their investments in Indian debentures due to lack of clarity on whether such instruments would attract lower withholding tax allowed by the government in May for bonds. It is unclear whether debentures are eligible for the lower withholding and this is resulting in holding back of investments in Indian debt.
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