The Securities and Exchange Board of India (SEBI) has introduced the Securities and Exchange Board of India (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025, marking a significant evolution in India’s regulatory framework for foreign portfolio investing. These amendments are designed to modernize access channels, streamline compliance, and align India’s capital market ecosystem with global standards—all while expanding participation through a new mechanism called SWAGAT-FI.
Introducing SWAGAT-FI: A Major Structural Reform
One of the most notable changes in the amendment is the creation of a new category:
Single Window Automatic and Generalised Access for Trusted Foreign Investor (SWAGAT-FI).
This mechanism aims to simplify and accelerate the registration and onboarding process for certain trusted investor classes, specifically:
- Government and government-related investors, and
- Public retail funds, such as widely held pension funds or mutual funds.
By recognizing these investors as low-risk, SEBI is paving the way for quicker market access, reduced documentation burdens, and improved ease of investing in India’s capital markets.
Key Amendments in Definitions and Eligibility
The amendment revises Regulation 2 of the original 2019 FPI Regulations by reorganizing clauses and inserting the definition of SWAGAT-FI. This sets the foundation for new compliance relaxations and operational efficiencies throughout the regulations.
Additionally, new provisions in Regulation 4 expand the eligibility criteria for FPI applicants. Notably:
- Indian mutual funds registered with SEBI may now act as constituents of an FPI applicant, subject to conditions specified by SEBI.
- Retail schemes and alternative investment funds (AIFs) receive newly calibrated, higher threshold requirements for contributions from fund management entities.
- Contributions for AIFs are standardized at 10% of corpus, while retail schemes must maintain 10% of assets under management (AUM) from the fund management entity.
These changes modernize fund governance norms and bring India’s FPI framework closer to international investment structures.
Fee Structure and Compliance Simplifications for SWAGAT-FI
To support the streamlined access offered under SWAGAT-FI, SEBI has amended the fee-payment structure:
- SWAGAT-FI entities will pay registration fees upfront once every 10 years, instead of on shorter renewal cycles.
- This change applies across relevant provisions in Regulation 7 and the Second Schedule.
This long-term fee structure mirrors global best practices for sovereign and widely-held funds, further enhancing India’s attractiveness as an investment destination.
When Do These Amendments Come Into Effect?
The regulations come into force 180 days after their publication in the Official Gazette.
However, certain clauses of Regulation 3 become effective immediately upon publication, ensuring that the most urgent reforms—especially those relating to definitions and eligibility—are implemented without delay.
Through these amendments, SEBI continues its strategic push toward:
- Simplified access for long-term, trusted foreign investors
- Strengthened regulatory oversight with clearer definitions and thresholds
- More transparent governance for AIFs and retail funds
- Improved ease of doing business in India’s financial markets
The introduction of SWAGAT-FI is particularly transformative, signaling India’s commitment to partnering with global institutions and fostering a more welcoming investment climate.