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SEBI has released a consultation paper proposing changes to greatly enhance resident Indian participation in FPIs investing in India.  It helps in creating a more inclusive and competitive investment environment.

One major proposal is to allow retail schemes in International Financial Services Centres (IFSCs) sponsored or managed by resident Indian non-individuals, to be registered as FPIs. Currently, such registration is not permitted if the schemes have Indian ownership. These schemes would require at least 20 investors, with a single investor’s stake at 25%, and limit investments in a single company to 10% of AUM. These rules are meant to promote diversification and avoid dominance by a single investor.

SEBI also aims to align the investment contribution limits for resident Indian non-individuals with the IFSCA (Fund Management) Regulations, 2025. This would raise the cap from the current 2.5% - 5% to 10% of a fund’s total corpus, bringing uniformity across various fund categories, including venture capital and retail schemes.

SEBI also proposes Indian mutual funds to invest in foreign mutual funds or unit trusts that hold Indian shares. Such foreign funds, when registering as FPIs, could include Indian mutual funds as investors. This would simplify cross-border investments and improve transparency.

These reforms align with the government’s push to strengthen IFSCs as global financial hubs, attract domestic and foreign capital, and bring Indian regulations in line with international standards by fostering a stronger and more connected investment ecosystem.

 

 

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