Foreign Institutional Investors

Government/Regulatory Initiatives

The Government of India has taken several initiatives to improve regulations and attract foreign capital. India has set up an international stock exchange to assist foreign investors investing in the country. The government has undertaken several initiatives to attract foreign capital. Some of the recent government initiatives and regulations in the FII space are as follows:

• To increase long-term foreign capital investment into government securities, SEBI relaxed compliance regulations for Foreign Portfolio Investors, creating an easier method to invest in Indian Government Securities through the Fully Accessible Route without having to meet the rules regarding Group Disclosures and other various reporting requirements.
• The SWAGAT-FI framework was launched to provide seamless access for all types of foreign investors wishing to invest in securities listed on stock exchanges and venture capital; to combine different methods through which foreign investors can enter the Indian marketplace; and to provide streamlined entry points for those wishing to do so.
• Securities and Exchange Board of India (SEBI), at its board meeting on June 18, 2025, introduced key reforms for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to enhance liquidity and investor confidence by streamlining fundraising norms, tightening sponsor lock-in requirements, improving disclosure standards, lowering investment thresholds, and expanding the role of merchant bankers.
• SEBI announced disclosure norms for foreign portfolio investors (FPIs), which came into effect from November 1, 2023. Under these regulations, overseas funds that hold more than 50% of their equity investments in a single Indian corporate group or have more than Rs. 25,000 crore (US$ 3.01 billion) of equity assets under management (AUM) in the Indian market will have to provide detailed information about their beneficial owners.
• The Reserve Bank of India has taken several actions to increase foreign exchange inflows. These actions consist of:
  • Exempting additional Foreign Currency Non-Resident (Bank) [FCNR(B)] and Non-Resident (External) Rupee (NRE) deposits from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
  • Authorization for banks to accept new FCNR(B) and NRE deposits without regard to current interest rate regulations until the end of October 2022.
  • Inclusion of all new issuances of 7-year and 14-year G-Secs under the Fully Accessible Route (FAR) for FPls.
  • Exemption from the short-term limit for FPls' investments in G-Secs and corporate debt made until October 31st, 2022.
  • Permitting FPI in commercial paper and non-convertible debentures with an original maturity of up to one year.
  • A temporary increase in the limit for external commercial borrowings (ECBs) under the automated route from US$ 750 million or its equivalent per fiscal year to US$ 1.5 billion.
  • Increase in the all-in cost ceiling under the ECB framework by 100 basis points, subject to the borrower having an investment grade rating.
  • Permission for AD Cat-I banks to use foreign currency borrowings made abroad to fund foreign currency loans to organisations for a variety of end uses other than exports.
• Liberalisation of Forex Flows was revised on 6th July 2022 to expand India’s external sector, diversify the sources of forex funding to mitigate volatility, dampening global spill overs and supporting exports of goods and services and rising remittances. Some measures are taken with the vision of enhancing India’s robust forex inflows while ensuring overall macroeconomic and financial stability.
• The Government of India increased FDI in the defence sector by increasing it to 74% through the automatic route and 100% through the government route.