At a time when Indian equity markets are navigating a difficult phase, regulatory intent assumes heightened importance. The global backdrop remains unsettled, with geopolitical tensions and ongoing conflicts weighing on investor sentiment. FIIs have been steadily pulling money out, while the rupee has shown signs of weakness. The combined effect is visible in market volatility, pressure on valuations, and a growing hesitancy among investors.

It is against this backdrop that the recent proposal of April 2 by SEBI to reintroduce open market buybacks through the exchange route must be viewed. This, along with the MPS relaxation given on April 7, is not a mere technical regulatory adjustment. It signals a broader policy direction—that domestic capital and corporate balance sheets can play a more active role in stabilising markets in such conditions.

Open market buybacks offer companies a degree of flexibility that other routes do not. Unlike tender offers, which are episodic and one-time in nature, stock exchange buybacks allow companies to intervene gradually, absorb selling pressure, and provide liquidity over time.

A key factor behind the reconsideration of this route is the change in tax treatment. Earlier, the buyback tax regime created distortions between participating and non-participating shareholders. With the shift to capital gains taxation in the hands of shareholders, that asymmetry has largely been addressed. The revised framework is more neutral and aligns India more closely with global practice.

Importantly, the proposal retains several safeguards aimed at preserving market integrity. These include a separate trading window for buybacks, exclusion of promoters from participation, limits on daily purchase volumes, price restrictions linked to prevailing market conditions, minimum utilisation........

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