India, Oct. 13 -- Amid heavy outflows, economists at the country's largest lender, SBI, on Monday called for abolishing the long-term capital gains (LTCG) tax on equities, which can help ensure such investors stay invested longer. "The government must seriously look into anchoring hot money flows into the equity segment by extending the holding period to say 2-3 years and abolishing the long-term capital gains tax for equity," SBI Research said in its Ecowrap report on Monday.

The proposal aims to anchor volatile foreign capital flows in the equity segment and reduce the risk of sudden outflows that can put pressure on the rupee. Currently, foreign portfolio investors pay the 12.5 per cent LTCG tax on equity investments.

The Union Budge...