Jaipur | Capital market regulator SEBI’s new chief, Tuhin Kanta Pandey, assumed office early this month. The appointment comes after the completion of Madhabi Puri Buch’s three-year tenure. She assumed office on 2 March 2022 and vacated the office on 28 February 2025.
Tuhin Kanta Pandey, a 1987 batch IAS Officer of Odisha cadre, is a seasoned bureaucrat with a sharp acumen in economic policy and asset management. He is best known for orchestrating the privatization of Air India. Pandey’s tenure as Secretary of the Department of Investment and Public Asset Management (DIPAM) positioned him as a key figure in India’s economic reforms. However, transitioning from the corridors of policymaking to the intricate world of market regulation presents a different challenge. Can he maintain a fine balance between facilitating market growth and enforcing stringent regulatory oversight?
Pandey takes charge at a time when Indian markets are suffering from multiple upheavals, an unprecedented reduction in retail participation, and an outraged section of the ecosystem over rules, compliances et al. Naturally, his role becomes even more crucial in tackling these challenges.
Recent Developments Before Pandey’s Appointment
= F&O Liquidity Reduction: SEBI’s move to curb excessive speculation in the derivatives market has led to reduced liquidity in Futures & Options (F&O), significantly affecting trading volumes and market participation.
= FII Taxation Concerns: The long-debated issue of Foreign Institutional Investors (FIIs) being taxed at double-digit rates remains a sticking point. Many investors believe this tax structure makes India less attractive compared to other emerging markets which resulted in increased FII outflows, raising concerns about capital flight from Indian equities.
= New Rules for Research Analysts & Investment Advisors: Compliance costs have surged due to SEBI’s stringent norms, making it increasingly difficult for independent research analysts and investment advisors to sustain their businesses.
= Introduction of SIF (Special Investment Fund) as a Competitor to PMS: SEBI recently introduced SIF as an alternative to Portfolio Management Services (PMS). While it offers investors more flexibility, critics argue that it could disrupt existing investment strategies and lead to regulatory arbitrage.
To top at all, retail investors – famously labelled “shock absorbers” by Finance Minister Nirmala Sitaraman – is in a state of shock, given the benchmark indices’ race to the bottom. While the market regulator’s job is not to take the market up, it is probably too many developments in too less a time, frustrating the market participants. Given this backdrop, Pandey’s first challenge will be to restore investor confidence and ensure that these regulatory shifts do not stifle market growth.
Market Expectations – Reformer or Stabilizer?
The million-dollar question: Will Pandey continue the aggressive reformist push of his predecessor, Madhabi Puri Buch, or will he adopt a more bureaucratic and measured approach? Investors will be watching closely for cues on his stance on transparency in financial disclosures, the regulatory environment for mutual funds and retail investors, and institutional concerns about compliance versus ease of doing business in capital markets.
One perennial pain point for foreign investors is the capital gains tax. Veteran fund manager Sameer Arora recently highlighted the disparity in India’s tax structure for foreign investors.”The capital gains tax in India, particularly for foreign investors, is 100% wrong. The largest investors in the world don’t pay taxes anywhere. In the US, there’s no tax for foreign investors. In India, FIIs pay 15-20% tax, which cannot be recovered. This makes Indian markets less attractive despite their strong performance.” This critique is largely on point and leads to even lower returns when coupled with the exchange rate movements. While capital gains taxation is something not directly under the purview of SEBI, market is hoping that he can instil a sense of urgency among policymakers. This is particularly important as India aims to attract global capital. Meanwhile, there are other aspects which can do with some radical thinking. The increased compliance burden and strict rules on a small but important segment of Research Analysts and Investment Advisors is one such example.
Many have announced their plans to give up licenses, describing the latest rules as regulatory overreach. Elsewhere, market participants claim that the constant tinkering with Additional Surveillance Measure (ASM) and Graded Surveillance Measure (GSM) has stifled fair price discovery. While well-intended, regulatory developments on similar lines in the booming SME market have failed to restrain prices. Given these multiple and pressing challenges, it will be interesting to see what SEBI manages to achieve under the new leadership. With transparency and technology-driven regulation already in motion, Pandey’s tenure will determine whether SEBI maintains its momentum or takes a more conservative approach. His ability to balance regulatory oversight with market expansion will shape investor confidence and India’s standing as a global investment hub. For now, all eyes are on Pandey. Will he be a reformer, a stabilizer, or a mix of both? Only time will tell-but one thing is certain: the stakes have never been higher.
