India's capital market participants have pressed for lower transaction taxes and stronger sector-wide reforms in the upcoming Union Budget 2026-27, during a high-level pre-Budget consultation with Finance Minister Nirmala Sitharaman on Tuesday.
According to officials familiar with the discussions, representatives from stock exchanges, mutual funds, investment advisers and commodity market bodies sought reduction in Securities Transaction Tax (STT) especially on cash market trades, which they argued should be taxed lower than derivatives to improve liquidity and encourage retail participation.
Focus on Market Efficiency and Inclusion
Stakeholders also submitted proposals aimed at enhancing market efficiency, deepening financial inclusion, and strengthening the overall capital market ecosystem. Suggestions included:
- Simplifying compliance processes for market intermediaries
- Introducing measures to widen retail investor access
- Strengthening risk-management frameworks
- Expanding product innovation across asset classes
This was the fourth pre-Budget consultation chaired by the finance minister, held with representatives from BSE, Multi Commodity Exchange (MCX), Association of Mutual Funds in India (AMFI), Association of Registered Investment Advisers (ARIA) and the Commodity Participants Association of India (CPAI).
Capital Markets Mobilised Rs 14.6 Lakh Crore in FY25
During the meeting, the government reviewed the sector's contribution to resource mobilisation. Capital markets helped raise Rs 14.6 lakh crore in FY25, marking a 33% jump compared to the previous year.
A large part of this growth came from equity and debt markets, which together mobilised Rs 14.2 lakh crore, underscoring their pivotal role in financing corporate expansion and infrastructure development.
Participants highlighted the increasing use of diversified financial instruments including equity, debt, REITs and InvITs-reflecting India's evolving capital-raising landscape.
Top Government Officials Attend Consultation
The discussions were attended by:
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Minister of State for Finance Pankaj Chaudhary
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Department of Economic Affairs Secretary Anuradha Thakur
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Chief Economic Adviser V. Anantha Nageswaran
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Senior Ministry of Finance officials
This meeting followed earlier consultations held with economists, agriculture sector representatives, and MSMEs as part of the Ministry's annual Budget preparation exercise.
Budget 2026-27 to Be Presented Amid Global Challenges
Finance Minister Sitharaman is expected to present her ninth consecutive Budget, likely on February 1, 2026, at a time when India faces:
- Rising geopolitical uncertainties
- A steep 50% US tariff on certain Indian exports
- The need to boost domestic demand, employment, and investment
The government projects India's GDP growth at 6.3%-6.8% for the current fiscal, but aims to steer the economy towards a sustained 8%+ growth trajectory through targeted fiscal measures.
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