One of the important ways to improve photosynthetic capacity in C3 crops, such as rice and wheat, is to transfer efficient C4 characters to them. Here, cytosolic carbonic anhydrase (βCA3) of the C4 Flaveria bidentis (Fb), having low Km for CO2, was overexpressed under the control of 35S promoter in Arabidopsis thaliana, a C3 plant, to enhance its photosynthetic efficiency. Overexpression of CA resulted in higher [HCO3-] in the cytosol of the overexpressors, and increased endogenous phosphoenolpyruvate carboxylase activity generating oxaloacetate that feeds into the tricarboxylic acid cycle. This provided more carbon skeleton for increased synthesis of amino acids and proteins. Further, transgenic expression of FbβCA3 in Arabidopsis led to pleiotropic expression of several genes/proteins involved in chlorophyll biosynthesis and photosynthesis leading to higher chlorophyll content and photosynthetic capacity in the transformants. Due to the presence of higher CO2 in the chloroplast, pleiotropic effect overexpressors had enhanced CO2 assimilation, starch content, and plant dry weight. In addition, transgenic plants had lower stomatal conductance, reduced transpiration rate and higher water use efficiency. These results, taken together, show that expression of C4 CA in the cytosol of a C3 plant can indeed improve its photosynthetic capacity with enhanced water use efficiency.