SEBI Introduces SWAGAT-FI Framework to Simplify Foreign Investment

On Aug 11, 2025, the capital market regulator, the Securities and Exchange Board of India (SEBI) has proposed a new investment framework, SWAGAT-FI, aimed at easing access for low-risk foreign investors in the Indian securities market. SWAGAT-FI (Single Window Automatic & Generalised Access for Trusted Foreign Investors), the initiative seeks to streamline the compliance process, reduce redundancy in documentation, and enhance India’s position as an attractive global investment destination.

The SWAGAT-FI framework will offer a single-window, unified registration process for eligible foreign investors, enabling them to invest through multiple routes without having to undergo separate compliance procedures for each. This integrated approach is designed to cut through regulatory complexity and offer a more seamless experience to globally trusted institutions.

SEBI is seeking stakeholder feedback on the SWAGAT-FI framework and has opened the proposals for public comment until August 29, 2025.

Eligibility: Who Qualifies as a SWAGAT-FI?

SEBI has outlined the types of foreign investors that would be classified as low-risk and thus eligible under the SWAGAT-FI route. These include sovereign wealth funds, central banks, government-owned funds, multilateral agencies, highly regulated public retail funds, and appropriately regulated insurance and pension funds. These entities are generally subject to rigorous oversight in their home jurisdictions, making them ideal candidates for a simplified compliance regime.

Dominant Share in FPI Assets

As of June 30, 2025, there were 11,913 registered Foreign Portfolio Investors (FPIs) in India, holding assets worth ₹80.83 lakh crore. According to SEBI estimates, more than 70% of these assets are held by entities that would qualify under the SWAGAT-FI framework, highlighting the significance of this investor category in India’s capital markets.

Dual Registration for Greater Flexibility

One of the key features of the proposal is the option for SWAGAT-FIs to register simultaneously as both FPIs and Foreign Venture Capital Investors (FVCIs). This would allow them to participate in both listed securities markets (as FPIs) and unlisted companies or startups in specified sectors (as FVCIs), without requiring additional documentation. This dual-track access is intended to offer more flexibility and investment reach.

Longer Compliance Cycle for Operational Ease

To reduce administrative burden, SEBI has suggested extending the compliance and registration renewal cycle to 10 years, up from the current three- or five-year periods. This change would apply to payment of fees and periodic KYC (Know Your Customer) documentation reviews, significantly reducing the frequency of regulatory touchpoints for long-term investors.

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Single Demat Account and Investment Tagging

Another proposal is to allow SWAGAT-FIs the optional use of a single demat account for all their holdings, whether through the FPI, FVCI, or other foreign investment routes. This would simplify account management and reporting. SEBI also plans to implement a tagging mechanism through depositories to ensure regulatory supervision and transparency across investment types.

Currently, the combined contribution from Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Resident Indians in an FPI is capped at 50% of the total corpus. Under the SWAGAT-FI proposal, SEBI has recommended removing this restriction, which could encourage more flexible and larger investments from Indian-origin stakeholders.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

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