US trade deal to spur investments into India, says Sebi Chairman Pandey

No fresh measures planned to tighten derivatives trades

Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on Wednesday said the India-US deal would remove uncertainties on the trade front, bring greater stability and predictability, and spur investments into India.

 

“When an overhang of a regulatory action is removed, trade frictions are removed. Any capital formation is always accelerated with the removal of uncertainties. Investment decisions will be spurred and there will be greater predictability on the capital to go for that. It will also have salutary movements on the exchange rate,” Pandey said on the sidelines of the launch of an outreach programme on corporate bonds. He was responding to queries on whether the deal would help revive foreign inflows.

 

On Tuesday, a day after the announcement of the trade deal and lower tariffs for India, foreign portfolio investors (FPIs) were net buyers of Indian equities to the tune of ₹7,561 crore.

 

Pandey’s comments come at a time when Indian equities have witnessed sustained foreign outflows. Foreign institutional investors (FIIs) were net sellers of ₹1.66 trillion in 2025, and have so far sold around ₹23,000 crore in 2026.

 

The Sebi chairman said the regulator’s responsibility was to provide a consistent, predictable, easy, and frictionless framework for FPIs to facilitate capital movement. He added that the market regulator was continuously refining its processes.

 

Pandey cited measures such as a common contract note, streamlined registration, use of digital signatures, and the proposed netting of margins for FPIs as steps taken to ease doing business.

 

The Sebi chief also addressed concerns among traders over the possibility of further tightening in the derivatives market, following the Union Budget’s announcement of an increase in securities transaction tax (STT) on futures and options (F&O) to curb speculation.

 

He said Sebi was not contemplating any additional regulatory measures on derivatives at present.

 

“As a regulator, we are looking at derivative markets in a very methodical manner, based on data and other inputs. At this moment, we are not contemplating any measures, and whatever framework we have put in place will continue,” he said.

 

On the development of the corporate bond market, Pandey said Sebi was actively engaging with both industry participants and investors.

 

The regulator is deliberating with market players on improving primary and public bond issuances, enhancing secondary market liquidity, increasing investor participation, and expanding access to bond products.

 

Pandey highlighted several structural challenges, including the market’s heavy skew towards highly rated issuers, fundraising largely dominated by financial institutions rather than a broader set of industries, the predominance of private placements that reduce transparency, and a shallow secondary market.

 

“A market-making framework will support continuous two-way quotes, reduce bid-ask spreads, and improve price discovery, thereby making corporate bonds a more reliable asset class for investors. Derivatives on corporate bond indices and total return swaps will help investors in efficient risk management,” he said.

 

Corporate bonds outstanding currently account for about 16 per cent of India’s gross domestic product (GDP), significantly lower than in countries such as South Korea and Malaysia, where the ratios stand at 79 per cent and 54 per cent, respectively.

 

While measures such as online bond platforms and a lower minimum investment threshold of ₹10,000 have been introduced to encourage retail participation, awareness of corporate bonds as an investment option remains limited to around 10 per cent of India’s population. By comparison, awareness of cryptocurrency stands at about 15 per cent.