SEBI has proposed measures to expand Indian partnership in FPI

In an effort to facilitate further participation of resident Indians in a foreign portfolio investment landscape, the Securities and Exchange Board India (SEBI) has issued a several major proposals to enhance the involvement of Indian investors in the FPI.

These proposals are designed to create a more comprehensive investment environment, especially for Indian non-individuals and mutual funds, allowing them to play a more significant role in international investment plans.

The proposed measures focus on expanding the scope of partnership of foreign portfolio investment (FPI) by residential Indians through a series of regulatory changes. Sebi’s move is expected to pave a wide range of investment options and increase the opportunities for Indian investors to diversify their portfolio globally.

The counseling paper invites public response to these instructions, which can have a significant impact on the investment landscape.

Key proposal

1. Retail plans in IFSC: The proposal suggests that retail schemes located at International Financial Services Centers (IFSC) in India are capable of, in which resident Indian non-individuals act as sponsors or managers, registered as FPIs. These schemes will be arranged with better clarity and existing investment rules for accession sexuality.
   
   
2. Configuration of Contribution Limit: SEBI has proposed to configure the contribution limit for resident non-individuals with IFSCA (Fund Management) Rules, 2025. This step will synchronize the contribution threshold for various types of funds, including adventure capital, restricted plans and retail plans.
3. Indian Mutual Funds as components of FPI: The proposal strives to allow Indian mutual funds to become components of FPI, allowing them to invest in foreign mutual funds or unit trusts in contact with Indian securities. This is to streamline the investment process and increase the transparency of such investments.

Background

Currently, under SEBI Foreign Portfolio Investors (FPI) Regulations, 2019, resident Indians (NRIs) and foreign nationals (OCIs) of India are forbidden to register directly as FPIs.

However, these individuals are allowed to remain in the components of FPI, which is subject to contribution limit and specific conditions on the control of the funds. For resident Indian non-individuals, partnerships are allowed in FPI if they meet some criteria, including the contribution limit for the funds they operate or sponsored and the specific categories of funds.

The counseling paper comes at a time when the government thinks of increasing the role of IFSC in India’s financial sector, which is looking to attract more global capital. By proposing to expand the scope of residential Indian partnership, SEBI aims to make the FPI route more accessible to a wide range of investors, including mutual funds, which can significantly diversify their foreign investments.

These proposals also reflect efforts to bring Indian financial rules to the corresponding Indian financial rules when promoting more vibrant and global investment environment.

Counseling Process:

People have been invited by the SEBI website to submit comments on these proposals by 29 August Gust, 2025. Sebi’s move to open the process for public input shows the importance of the stakeholder’s response to the policies affecting both retail and institutional investors.

The counseling process will influence the potential final regulatory structure and may indicate a shift towards the rules of more liberal foreign investment for Indian participants.

With the introduction of these steps, the Indian investment is willing to see significant changes in the community that can resize the way FPI works in India, offering new ways to grow and diversification in global markets.

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