Industry leader and Rajya Sabha Member Rahul Bajaj asked Finance Minister P Chidambaram on Wednesday toimpose a tax on foreign institutional investors to contain impact of surging fund flows on rupee and exports.
"To contain rupee appreciation, which would affect Indian exports, Finance Minister should consider in his Budget a tax on the flow of foreign funds after a certain limit," he said in Davos.
Bajaj, who has been attending the WEF Davos meeting for over a decade, said flow of funds in stock market should be taxed to check the liquidity build-up as is done by the Reserve Bank of India through Statutory Liquidity Ratio and Cash Reserve Ratio.
On a sharp fall in the stock market, he said, "fundamentals of Indian economy are no more as strong as the politicians would like us to believe...they have to make political statements."
The interest rate cut by US Federal Reserve by 75 basis points on Tuesday could adversely affect Indian exports as rupee would further appreciate against dollar, the Bajaj Auto chief said.