Are New Norms by SEBI Making it Easier for Resident Indians to Invest in Foreign Funds?
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Synopsis
The SEBI's proposed changes aim to simplify the process for resident Indians and mutual funds to invest in foreign markets. This could pave the way for enhanced global investment opportunities and broaden the investment landscape for Indian investors, allowing them to diversify their portfolios more effectively.
Key Takeaways
- SEBI's new proposals aim to ease investment processes for resident Indians.
- Investment cap for FPIs is set at 10 percent of the targeted corpus.
- Retail schemes in IFSCs can now register as FPIs.
- New norms may enhance global investment opportunities for Indian investors.
- Public feedback on these proposals is invited until August 29.
Mumbai, Aug 9 (NationPress) The Securities Exchange Board of India (SEBI) has introduced simplified regulations for resident Indians and mutual funds seeking to invest in foreign funds. The proposed framework allows retail schemes established in International Financial Services Centres (IFSC) within India, with resident Indian non-individuals as sponsors or managers, to register as Foreign Portfolio Investors (FPIs).
The cap on investments is set at 10 percent of the targeted corpus, aligning with IFSC guidelines, as stated in a release from SEBI.
One of the key suggestions is to substitute the roles of sponsor and manager with a fund management entity or affiliate for IFSC FPIs. Additionally, SEBI is considering permitting Indian mutual funds to invest in international funds that have exposure to India.
These initiatives aim to expand investment avenues for Indian investors, thereby diversifying their portfolios. If enacted, these reforms could significantly connect India’s domestic savings with global investment opportunities.
At present, only specific institutional investors that meet SEBI’s criteria can register as FPIs to invest in foreign securities. The proposed modifications focus on retail-oriented investment schemes within IFSC, which would enable a wider range of India-based entities to direct domestic capital into foreign assets through a regulated framework.
Currently, non-resident Indians (NRI), overseas citizens of India (OCI), or resident Indians cannot register as FPIs. However, NRIs, OCIs, or resident Indian individuals can be constituents of FPIs, under certain contribution limits and control terms.
The Reserve Bank of India (RBI) allows individuals to remit up to Rs 2.5 lakh annually for overseas investments through its liberalised remittance scheme. Retail investors typically rely on indirect channels and Fund of Funds (FoF) opportunities in global mutual funds for exposure to foreign markets.
IFSC serves as a special economic zone (SEZ) designed as a global financial hub within India, facilitating international financial transactions and operations.
SEBI has invited public feedback on these proposals until August 29.
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Point of View
It is our duty to present unbiased perspectives. The proposed SEBI reforms signify a progressive step towards enhancing investment avenues for resident Indians. By simplifying the process for participation in foreign markets, SEBI not only supports retail investors but also strengthens the bridge between domestic savings and global opportunities.
NationPress
19/08/2025
Frequently Asked Questions
What are the new norms proposed by SEBI?
SEBI has proposed easier regulations for resident Indians and mutual funds to invest in foreign funds, enabling retail schemes in IFSCs to register as FPIs.
What is the investment cap for FPIs as per the new proposal?
The investment limit is capped at 10 percent of the targeted corpus, in alignment with IFSC regulations.
Who can register as FPIs under the new norms?
The proposed changes would allow a wider range of India-based entities to register as FPIs, focusing on retail-oriented investment schemes.
What does IFSC stand for?
IFSC stands for International Financial Services Centre, which is a special economic zone in India designed for international financial transactions.
How much can individuals remit annually under the RBI scheme?
Under the RBI's liberalised remittance scheme, individuals can remit up to Rs 2.5 lakh annually for overseas investments.
