3 min readMumbaiUpdated: Feb 5, 2026 06:12 AM IST
Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey Wednesday expressed confidence that the India-US trade deal will spur investments and accelerate capital formation in the country.
On Monday, US President Donald Trump announced India and the US had agreed on a trade deal, under which Washington will reduce reciprocal tariffs on Indian goods to 18 per cent from the current 50 per cent. Last week, India and the EU also concluded a landmark Free Trade Agreement.
“I would say that with the deals that have been done on the trade side, a lot of uncertainties have been removed. Capital formation is always accelerated with the removal of uncertainties… the investment decisions will be spurred, and there will be a greater predictability on the capital to go for that,” Pandey said when asked if he sees a reversal in outflows from foreign portfolio investors (FPIs) after the finalisation of the India-US trade deal. He was speaking to reporters on the sidelines of the pan-India outreach programme for corporate bonds.
“It (trade deal) will also have a salutary movement on the exchange, which will also bring in stability and predictability,” he added.
FPIs have been offloading domestic equities for the past many months amid concerns over various geopolitical tensions, including the levy of higher reciprocal tariffs by the US on India and other major economies. In 2025, foreign investors sold Rs 1.66 lakh crore of domestic shares on a net basis. Since January this year, they have sold Rs 27,612 crore worth of equities. Higher outflows from the FPIs also weighed on the rupee, which plunged 5 per cent against the dollar in 2025.
The announcement of the India-US trade deal boosted investor sentiment on Tuesday, with domestic stock market indices Sensex and Nifty surging 2.5% each. Foreign investors turned net buyers of local equities, purchasing Rs 5,236 crore, while the rupee strengthened by over 1%.
Pandey added that SEBI has been streamlining regulations to ensure the ease of doing business for foreign investors.
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“As a regulator, our duty is to provide a consistent, predictable, easy and frictionless framework to ensure the easy flow of capital. As part of this, we are constantly improving the regulatory framework,” he said.
Some of the recent measures include a reduction in registration timings, facilitating digital signatures to ensure submission of documents digitally, and simplification of the block deal framework.
“All of these issues are very important for FPIs in terms of market regulation. Rest is their own assessment of their post-tax returns, which are available in different markets. They keep assessing and deciding about that (investments),” he said.