The Securities Exchange Board of India has proposed easier norms for Indians and mutual funds to invest in foreign funds. The regulator has proposed to allow retail schemes in International Financial Services Centre with Indian firms as sponsor and manager register as FPIs. The investment limit is capped at 10% which is in line with IFSC rules.
The suggestion is to replace sponsor and manager with fund management entity or associate for IFSC FPIs. SEBI has also suggested to allow Indian mutual funds to invest in overseas funds with India exposure.
The consultation paper was released on Aug. 8 and the regulator is seeking public feedback to its proposals till Aug. 29, 2025, SEBI said in their website.
These proposals aim to increase investment options for Indian investors to diversify their portfolios. These suggestions also aligns India's financial regulations to international standards to foster a dynamic and globally connected investment environment.
If implemented, these reforms could bridge the gap between India's domestic savings pool and international opportunities.
Where Things Stand Currently
At present, only certain institutional investors meeting SEBI's criteria can register as FPIs to invest in foreign securities.
The proposed changes focus on retail-oriented investment schemes set up in IFS, would allow a broader range of India-based entities to channel domestic capital into foreign assets through a regulated framework.
This could provide domestic investors with more diversified investment options, including exposure to foreign equities, bonds, and other instruments, without the need for them to invest directly abroad.
The move comes as India continues to position IFSCs as global financial hubs and deepen integration with international capital flows.
It also aligns with the Reserve Bank of India's liberalised remittance scheme, which allows individuals to remit up to Rs 250,000 annually for overseas investments, but often leaves retail investors reliant on indirect channels for foreign exposure.
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