Markets regulator Sebi has introduced a new framework to make it easier for low risk foreign investors to participate in the Indian securities market.
The move, aimed at simplifying compliance and enhancing the country’s attractiveness as an investment destination, comes through the Single Window Automatic and Generalised Access for Trusted Foreign Investors (SWAGAT-FI).
The SWAGAT-FI framework will provide easier investment access to low risk foreign investors, enable a unified registration process across multiple investment routes, and reduce repeated compliance and documentation requirements for such entities.
Sebi has identified low risk foreign investors to include government-owned funds, central banks, sovereign wealth funds, multilateral entities, highly regulated public retail funds, and appropriately regulated insurance companies, as well as pension funds.
Sebi introduced the SWAGAT-FI framework for both Foreign Portfolio Investors and Foreign Venture Capital Investors through two separate notifications dated 1 December.
The regulator has amended FPIs and FVCIs regulations, which will come into force on 1 June, 2026. The amendments follow the Sebi board’s approval of the proposal in September.
Under the new framework, SWAGAT-FIs applying for registration or already registered as FPIs have the option to also register as FVCIs without the need for additional documentation.
Registration under both FPI and FVCI regulations will enable SWAGAT-FIs to invest in listed equity instruments and debt securities of Indian companies as FPIs, and in unlisted Indian companies engaged in specified sectors and startups as FVCIs under respective regulations.
To enhance ease of compliance, Sebi has increased the periodicity for continuance of registration, including payment of fees and review of KYC documentation, to 10 years, up from the current three-year or five-year periods.
For FPIs operating from International Financial Services Centres, Sebi has allowed retail schemes with a resident Indian sponsor or manager to register as FPIs.
Currently, only Alternative Investment Funds in IFSCs with a resident Indian sponsor or manager are permitted to register as FPIs.
Sebi also noted that limits on sponsor contribution by resident Indian non-individuals in funds set up in IFSC, as specified by Sebi and International Financial Services Centres Authority, were at variance, creating a risk of non-compliance.
The regulator amended FPI Regulations to cap such sponsor contributions at a maximum of 10 per cent of the corpus of the fund or assets under management in the case of retail schemes.
As of June 30, 2025, India had 11,913 registered FPIs holding assets worth Rs 80.83 lakh crore.
Sebi estimates that SWAGAT-FIs will contribute more than 70 per cent of the total assets under custody of all FPIs.