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SEBI Moves to Expand FPI Access for Resident Indians in IFSCs
9 Aug
Summary
- SEBI proposes allowing retail schemes in IFSCs to register as FPIs
- Seeks to align FPI contribution limits with IFSCA regulations
- Aims to help Indian mutual funds diversify globally
In a move to expand investment opportunities for resident Indians, the Securities and Exchange Board of India (SEBI) has proposed several changes to its Foreign Portfolio Investor (FPI) framework. The market regulator released a consultation paper on August 8, 2025, seeking public comments by August 29.
One key proposal is to allow retail schemes based in India's International Financial Services Centres (IFSCs), with resident Indian non-individuals as sponsors or managers, to register as FPIs. This would provide a new avenue for retail investors to participate in foreign markets.
Additionally, SEBI seeks to align the contribution limits for FPIs with the regulations set by the International Financial Services Centres Authority (IFSCA). Currently, FPI rules cap resident Indian non-individual contributions at 2.5% for Category I & II Alternative Investment Funds (AIFs) and 5% for Category III AIFs. SEBI now proposes to raise this limit to 10% of the corpus or assets under management, matching the IFSCA's guidelines.
The regulator also aims to facilitate greater global diversification for Indian mutual funds. SEBI proposes to permit Indian mutual funds to be constituents of overseas mutual funds or unit trusts registering as FPIs, provided they meet certain conditions.
These proposals are part of SEBI's efforts to harmonize its FPI framework with IFSCA's fund management regulations, reduce compliance burdens, and expand investment opportunities for resident Indians.
