SC’s Tiger Global ruling unlikely to spook FPIs

The Supreme Court’s verdict directing Tiger Global to pay capital gains tax on its 2018 sale of Flipkart shares is unlikely to accelerate the selloff by foreign portfolio investors (FPIs).

- KHUSHBOO TIWARI

However, legal and tax experts say the ruling sharpens scrutiny around treaty benefits and could influence how offshore investors structure future India bets.

Market participants broadly view the judgment as fact-specific, centered on the interpretation of grandfathering provisions under the India-Mauritius tax treaty and the application of the General Anti-Avoidance Rule (GAAR). As a result, the ruling is not expected to lead to panic-driven FPI selling or abrupt changes in portfolio allocations.

FPIs have pulled out nearly $2 billion this month. However, it is on account of factors such as US trade deal uncertainty, relatively expensive valuations and lack of AI-theme stocks.

“The Tiger Global ruling is unlikely to trigger any immediate or large-scale FPI selloff,” said Aditya Bhattacharya, partner at King Stubb & Kasiva, Advocates and Attorneys. “FPIs generally price in tax risks over time, and this decision is confined largely to grandfathering and substance.”

Experts said the verdict clarifies that grandfathering benefits cannot be claimed mechanically, and that investors must demonstrate commercial substance and eligibility. Legal advisors expect FPIs to respond not by exiting India, but by reassessing structures.