New Delhi: The Securities and Exchange Board of India (SEBI) has suggested new rules to make it easier for resident Indians and mutual funds to invest in foreign portfolio investments (FPIs).
The changes are aimed at giving Indian investors more ways to invest overseas and diversify their portfolios.
Proposal to Include Resident Indian Entities in IFSC-Based FPIs
SEBI proposed that retail investment schemes set up in India’s IFSCs (International Financial Services Centres) with resident Indian non-individuals (such as companies or trusts) as sponsors or managers should be allowed to register as FPIs.
According to SEBI’s release, the investment limit will be capped at 10% of the target fund size, as per existing IFSC rules.
Changes in FPI Structure Suggested
SEBI also suggested replacing the sponsor or manager with a fund management entity or an associate for IFSC-based FPIs.
Another key proposal is to allow Indian mutual funds to invest in foreign funds that have exposure to Indian markets.
These steps could broaden access for Indian investors and help connect domestic savings with global investment opportunities.
Current Rules and Limitations
Right now, only select institutional investors that meet SEBI’s criteria can register as FPIs to invest abroad.
Resident Indians, NRIs, and OCIs are currently not allowed to register as FPIs. However, they can be part of an FPI, but only if they meet strict limits on ownership and control.
Retail Investors’ Overseas Investment Options Are Limited
Under the RBI’s Liberalised Remittance Scheme (LRS), individuals can send up to Rs 2.5 lakh per year abroad for investments.
But for now, retail investors mostly rely on indirect options like fund of funds (FoFs) in global mutual funds to access foreign markets.
About IFSC and SEBI’s Public Consultation
The IFSC is a special economic zone (SEZ) in India that acts as an international financial center, allowing institutions to handle global financial services from within India.
SEBI has invited public comments on these proposed changes until August 29.
