Prashant Jain, Founder of 3P Investment Managers, defended India’s current Long-Term Capital Gains (LTCG) tax structure as “equitable,” pushing back against calls for cuts to incentivize foreign investment. He pointed out that salaried middle-class individuals earning ₹20 lakh to ₹50 lakh annually pay 30% to 40% in income tax, whereas ultra-high-net-worth individuals earn the bulk of their income through capital gains.
“I think the current rates I think are very fair. I mean taxation should Be equitable,” Jain told CNBC-TV18 in a special interaction for the upcoming Samvat 2083 on Wednesday, November 4.
“I don’t think anyone would invest in a company or a stock market just because tax is not there,” he said, adding that investors are primarily drawn to decent growth potential. Jain noted that for foreign investors, procedural complications are often a larger hurdle than the tax rate itself.
Jain highlighted a recent interaction with Morgan Stanley’s Ridham Desai, who told him that it’s not so much a question of taxation in India for foreigners, but it complicates the processes, the procedure for them.
Indian equity markets are positioned to deliver a compound annual growth rate of 12% to 15% over the next three to five years, driven by economic growth and corporate profits rather than foreign capital, according to Jain, who added that India has outgrown its dependence on overseas capital. With domestic inflows reaching ₹40,000 crore to ₹50,000 crore every month, he highlighted a very weak correlation between foreign flows and medium-to-long-term market returns.
On the flip side, Jain observed a sharp correlation between foreign flows and primary market activity, where capital raises tend to increase during months of positive inflows and decline when flows turn negative.
The veteran fund manager also addressed recent capital flights to memory-heavy markets like Korea and Taiwan, driven by the artificial intelligence boom. He categorized memory as a deep cyclical commodity rather than an intellectual property-driven business, predicting that expanding capacities will reverse the price surge within one to three years.
As that cycle peaks, he expects India’s steady 7% to 8% economic growth—delivered with low volatility—to look extremely attractive to global investors once again.
Prashant Jain On LTCG: Veteran Fund Manager says current tax structure is ‘equitable’