In a strategic move to enhance India's attractiveness as an investment hub, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the removal of capital gains tax on investments in government securities by Foreign Portfolio Investors (FPIs). This decision, made during a Cabinet meeting on Wednesday, will be implemented via an ordinance that amends the Income Tax Act, allowing for expedited action without waiting for parliamentary approval. Currently, FPIs are subject to a 12.5% Long Term Capital Gains (LTCG) tax on listed shares and bonds held for over 12 months. The removal of this tax is anticipated to significantly boost the yield attractiveness of Indian sovereign debt for foreign investors, who have previously identified this tax as a barrier to investment. Additionally, government sources indicate that this decision is part of a larger initiative to promote capital inflows and mitigate economic impacts from ongoing geopolitical conflicts in West Asia, which have disrupted global markets and supply chains. By eliminating this tax, India aims to deepen foreign participation in its sovereign bond market, potentially supporting the rupee and managing borrowing costs effectively.