SEBI proposes steps to boost Indian participation in FPIs
What's the story
The Securities and Exchange Board of India (SEBI) has proposed a series of measures to boost resident Indian participation in foreign portfolio investments (FPIs). The move is aimed at creating a more inclusive investment environment, especially for non-individuals and mutual funds. The proposals are part of a consultation paper released by SEBI, which seeks public feedback on the suggested changes.
Regulatory changes
Regulatory changes to expand FPI scope
The proposed measures by SEBI include a series of regulatory changes aimed at expanding the scope of FPIs. One key proposal is to allow retail schemes based in International Financial Services Centers (IFSCs) in India, with resident Indian non-individuals as sponsors or managers, to register as FPIs. This would align these schemes with existing investment regulations for better clarity and accessibility.
Contribution thresholds
Aligning contribution limits with IFSCA regulations
Another proposal from SEBI is to align the contribution limits for resident Indian non-individuals with the IFSCA (Fund Management) Regulations, 2025. This would harmonize contribution thresholds across different types of funds operating within IFSCs, including venture capital, restricted schemes, and retail schemes. The move is expected to streamline investment processes and enhance transparency in such investments.
Investment streamlining
Mutual funds as constituents of FPIs
The third proposal from SEBI seeks to allow Indian mutual funds to become constituents of FPIs. This would enable them to invest in overseas mutual funds or unit trusts with exposure to Indian securities. The move is aimed at streamlining the investment process and enhancing transparency in such investments, thereby making it easier for investors to diversify their portfolios globally.
Policy shift
Current status and proposed changes
Currently, resident Indians, including NRIs and OCIs, are not allowed to directly register as FPIs under the SEBI FPI Regulations. However, they can be constituents of FPIs subject to certain conditions on contribution limits and control within the funds. The proposed changes by SEBI are likely to make the FPI route more accessible for a wider range of investors.
Stakeholder feedback
Public comments invited on modifications
SEBI has invited public comments on the proposed changes by August 29, 2025, through its website. The move highlights the importance of stakeholder feedback in shaping policies that impact both retail and institutional investors. The consultation process is likely to influence the final regulatory framework and could indicate a shift toward more liberalized foreign investment rules for Indian participants.