SEBI Proposes Widening FPI Access for IFSC Funds, Resident Indians and Mutual Funds

The Securities and Exchange Board of India (“SEBI”) has released a consultation paper dated August 8, 2025 (link) (“Consultation Paper”), proposing regulatory changes to broaden the participation of resident Indians, particularly non-individuals and mutual funds (“MFs”), in the Foreign Portfolio Investment (“FPI”) regime. The move is aligned with the government’s objective of strengthening the role of International Financial Services Centres (“IFSCs”) and integrating Indian investors more closely into global capital markets.

SEBI has through the Consultation Paper proposed the following key proposals and changes:

1. Enabling retail schemes based in IFSCs with resident Indian non-individuals as sponsor/manager to register as FPIs;
2. Alignment of limits on contribution by resident Indian non-individual sponsor/manager;
3. Permit Indian MFs to be constituents of FPI; and
4. Draft amendments to SEBI (FPI) Regulations, 2019 in line with the above proposed changes.

SEBI is inviting stakeholder and public comments or suggestions on the Consultation Paper till August 29, 2025. These proposals, if implemented, would significantly enhance the operational flexibility for India-based fund structures in IFSCs, resolve critical compliance challenges, and further integrate Indian MFs into global markets.

Read the detailed update here