SEBI Proposes New Rules to Boost Resident Indian Participation in FPIs

The Securities and Exchange Board of India (SEBI) has issued a consultation paper aimed at enhancing resident Indian participation in the Foreign Portfolio Investment (FPI) framework. The proposals focus on broadening the role of Indian non-individuals and mutual funds in international investment structures. 

As per news reports, By opening up new regulatory avenues, SEBI seeks to provide investors with increased access to global markets and greater opportunities for portfolio diversification. Public feedback on these proposals has been invited by August 29, 2025, a move that could significantly influence the final structure of FPI  regulations.

Key Proposed Measures

Retail Schemes in IFSCs: The plan suggests allowing retail schemes located in International Financial Services Centres (IFSCs) in India, where resident Indian non-individuals act as sponsors or managers, to register as FPIs. This would ensure consistency with existing investment norms and improve accessibility.

Alignment of Contribution Limits: SEBI intends to align the contribution thresholds for resident Indian non-individuals with the IFSCA (Fund Management) Regulations, 2025. This would unify limits across various fund categories, such as venture capital funds, restricted schemes, and retail schemes within IFSCs.

Indian Mutual Funds as Constituents of FPIs: The proposal also looks to permit Indian mutual funds to be part of FPIs, enabling them to invest in overseas mutual funds or unit trusts that hold Indian securities. This change is designed to simplify the investment process and improve transparency.

Context and Impact

Currently, under the SEBI Foreign Portfolio Investors (FPI) Regulations, 2019, resident Indians cannot directly register as FPIs, although they may participate under certain conditions. The proposed changes are aligned with the government’s efforts to strengthen the role of IFSCs in India’s financial ecosystem and attract more global capital. 

By expanding eligibility, SEBI aims to create a more inclusive and globally aligned investment environment. The consultation process underscores the importance of stakeholder input and is expected to shape policies that could lead to more liberalised foreign investment rules for Indian participants.

Read More: SEBI Proposes Easing Compliance for FPIs Investing in Government Bonds!

Conclusion 

SEBI’s proposals mark a step towards liberalising foreign portfolio investment access for resident Indians, fostering global diversification, regulatory clarity, and deeper integration of Indian investors into international markets.

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