On December 5, 2025, SEBI released an important Consultation Paper proposing a major update to the Master Circular for Foreign Portfolio Investors (FPIs) and Designated Depository Participants (DDPs). This initiative reflects SEBI’s ongoing commitment to fostering a transparent, simplified, and investor-friendly regulatory environment for global investors participating in India’s markets.
Why the Update Was Needed
Foreign Portfolio Investors play a crucial role in the Indian securities market by providing liquidity, deepening market participation, and supporting long-term capital formation. Their operations are governed primarily by the SEBI (Foreign Portfolio Investors) Regulations, 2019, which outline eligibility conditions, registration procedures, KYC norms, ongoing compliance obligations, investment conditions, and the framework for issuing Offshore Derivative Instruments (ODIs).
Over time, SEBI supplements these regulations with detailed operational guidelines issued through circulars. To avoid fragmentation and ensure clarity, these guidelines are periodically consolidated into a Master Circular. The most recent consolidated version was released on May 30, 2024.
However, since the issuance of that Master Circular, SEBI has introduced several new circulars impacting FPI processes and regulatory requirements. This made it necessary to update the consolidated document to ensure consistency and ease of reference.
Streamlining for Clarity and Efficiency
Rather than simply adding new circulars to the existing Master Circular, SEBI undertook a broader review with a clear goal:
to simplify, streamline, and modernize the FPI compliance framework.
Key objectives of the exercise include:
- Simplification of the language used in the Master Circular, making it easier for stakeholders across jurisdictions to understand compliance requirements.
- Removal of duplication, especially in cases where similar guidelines appear in multiple circulars.
- Omission of redundant or transitory provisions, which may no longer be relevant due to regulatory changes or expiration of temporary requirements.
- Overall enhancement of ease of doing business, enabling FPIs to navigate regulatory expectations more efficiently.
The review process was undertaken in close consultation with market participants, ensuring that practical challenges and on-ground experiences were considered.
Draft Updated Master Circular Now Open for Public Comments
SEBI has now prepared a draft updated and simplified Master Circular, which incorporates all circulars issued since May 2024 and reflects the results of the streamlining exercise. The draft has been published in the Consultation Paper as Annexure-I.
Stakeholders—including FPIs, DDPs, custodians, law firms, market intermediaries, and global investors—are invited to submit comments and suggestions.
The deadline for public comments is December 26, 2025.
Responses can be submitted through the link provided on SEBI’s website.
A Step Toward Greater Transparency
This consultation underscores SEBI’s proactive approach to policymaking—one grounded in collaboration, transparency, and a deep understanding of market needs. By refining the FPI Master Circular, SEBI aims to reduce compliance complexities and strengthen India’s position as a preferred investment destination for global portfolio investors.