During January to April, investment by foreign portfolio investors (FPIs) totalled Rs 94,241 crore, but month-on-month analysis showed the fund flows are on a decline.FPI investments in January this year stood at Rs 33,688 crore, before dropping to Rs 24,564 crore in February, Rs 20,723 crore in March and Rs 15,266 crore in April.

However, in May things took a turn for the worse as FPIs withdrew an estimated Rs 14,674 crore (USD 2.3 billion) during the month so far, according to the latest data from depositories.This included an outflow of Rs 5,867 crore from the equities and another Rs 8,807 crore from the debt markets.

The huge sell off comes amid worries over imposition of 20 percent minimum alternate tax on capital gains by overseas investors till April 1, 2015. Besides, experts attributed outflows in the debt markets  to sell-off in bonds globally, rise in global crude oil prices and uncertainty on rate cut by the Reserve Bank.

To assuage concerns of FPIs slapped with MAT demand, the government on May 11 put on hold issuance of fresh notices and any further assessments on levy of this tax on such entities. This was in response to the Income Tax Department issuing notices to 68 FIIs totaling Rs 602 crore over non-payment of MAT.

Some foreign investors have gone to court while the government last week set up a high-level committee to resolve the issue. Since January 2015, overseas investors have invested a net amount of Rs 79,634 crore in the Indian capital markets (equity and debt).

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