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Foreign investors are still unsettled by the Supreme Court’s Tiger Global tax ruling, and that backdrop mattered as Finance Minister Nirmala Sitharaman spoke about India’s fiscal position in Budget 2026. In her speech, she said the government expects the debt-to-GDP ratio to fall to 55.6 per cent in 2026-27, from 56.1 per cent in 2025-26.

The comment comes at a time when overseas funds are questioning the predictability of India’s tax regime, especially after the court ruled that Tiger Global must pay tax on its 2018 Flipkart exit, overturning relief granted earlier by the Delhi High Court.

Debt-to-GDP is closely watched by foreign investors as it reflects the overall burden of government borrowing, not just one year’s fiscal deficit. A lower ratio suggests that the government is relying less on debt as the economy grows. India’s debt stood at around 56 per cent in FY26, with total liabilities nearing Rs 197 lakh crore. The government has said it wants to bring this closer to 50 per cent by 2031.

Sandeep Sikka, executive director and CEO of Nippon Life India Asset Management, said foreign investors are likely to welcome the direction of fiscal consolidation. He said the declining debt ratio, along with steps such as monetising CPSE and government-owned real estate through REITs, could help reduce borrowing over time. He also pointed to the push for municipal bonds as a positive signal.

Some markets expert were found to be more guarded before the budget. Market veteran Mehraboon Irani, in a pre-budget statement, said foreign investors need greater comfort around India’s capital markets. He added that clarity on tax treatment and possible concessions for foreign investors would matter more than headline numbers. Tiger Global court ruling created trust deficit amongst foreign investors, he added.

The Supreme Court on January 15, 2026 upheld the Indian tax authorities’ demand for capital gains tax on Tiger Global’s exit from Flipkart in 2018, a ruling that tax experts say points to a tighter interpretation of tax treaties and could make foreign investors rethink their holding structures and exit plans.

Setting aside a 2024 judgment of the Delhi High Court, the apex court held that the transaction involving the Mauritius-based Tiger Global entity selling shares of Flipkart Singapore through an indirect transfer is taxable in India.

The court’s decision marks a setback for Tiger Global, which had argued that the sale was protected under the India–Mauritius tax treaty. Instead, the ruling reinforces the tax department’s position that such offshore transactions can still attract Indian capital gains tax if the underlying assets are located in India.

Tiger Global International II, III and IV Holdings are private companies incorporated in Mauritius to make investments on behalf of Tiger Global Management LLC, a US-based investment firm. Tax experts said the verdict could prompt overseas investors to reassess their investment routes into India, particularly for large exits in the technology and e-commerce space.

While the Budget has tried to send a reassuring message on fiscal discipline, analysts say confidence will depend on how tax disputes and treaty interpretation issues play out on the ground.