SEBI Proposes New Simplified Framework for Foreign Investors

SEBI has proposed a new framework called “Single Window Automatic and Generalised Access for Trusted Foreign Investors” (SWAGAT-FI) to simplify the investment process for Foreign Portfolio Investors (FPIs) and Foreign Venture Capital Investors (FVCIs). The initiative aims to provide a more streamlined and efficient entry for a specific group of verified, low-risk foreign investors, such as central banks, sovereign wealth funds, and regulated public retail funds. The framework proposes several relaxations for these “trusted” investors, including an optional single-window registration for both FPI and FVCI status, extending the registration and KYC review periodicity from three to ten years, and removing the 50% cap on contributions from Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Resident Indian individuals (RIs). It also proposes an optional single demat account for holding all securities, with depositories tagging assets to ensure regulatory oversight. This initiative is designed to reduce the compliance burden, attract more stable long-term capital, and improve India’s standing as an investor-friendly market.

Securities and Exchange Board of India

Proposal to introduce the “Single Window Automatic and Generalised Access for Trusted Foreign Investors (SWAGAT-FI)” framework for FPIs and FVCIs

1. Objective:

1.1. The purpose of this Board Memorandum is to propose simplification of on-boarding and ongoing compliances for an objectively identified set of trusted and verified Foreign Portfolio Investors (FPIs) by introducing the “Single Window Automatic & Generalised Access for Trusted Foreign Investors (SWAGAT-FI)” framework for FPIs and FVCIs.

2. Background

2.1. Under the extant regulatory framework, there are several routes for foreign investment in India based on the type of investor, type of investment, type of investee entity or type of securities permitted under Foreign Exchange Management Act, 1999 (FEMA) and rules and regulations issued thereunder. Each investment route has its own attendant conditions, investment thresholds, eligibility requirements, operational processes and compliance obligations. A foreign investor looking to invest in the Indian securities market navigates through a range of investment routes e.g. Foreign Direct Investment (FDI), investment as FPI, investment as Foreign Venture Capital Investor (FVCI), investment through investment vehicles such as Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), to invest in the Indian securities market.

2.2. In the recent global FPI outreach programmes of SEBI covering several FPIs, while India is considered as a highly attractive long term destination for investment by foreign investors (considering that India is amongst the leaders in terms of consistent returns earned by investors over time), there was a felt need for a less complicated and smooth process for on boarding and for making investment.

2.3. Simplification of regulatory framework around foreign investment is linked to the larger Foreign Exchange Policy and hence, may need a holistic evaluation. However, to begin with, it is proposed to provide a single window access for foreign investors making investment under routes governed under regulations made by SEBI i.e. FPI and FVCI. In addition to providing easier access, proposals are also made towards easing other regulatory compliances under regulations made by SEBI. This can help eventually pave the way to a broader remit covering other investment schedules of FEMA, in coordination with RBI and Government of India.

2.4. Over the years, several steps have been taken to ease the investment journey for foreign investors including FPIs. SEBI has undertaken several steps to make onboarding and participation of FPIs easier, including risk-based KYC requirements, simplification of documentation and introduction of Common Application Form (CAF). Recently, RBI has further relaxed conditions for foreign investment in corporate bonds. Norms for investment by FPIs in Government securities have also been eased by RBI over the years including under the Fully Accessible Route (FAR).

2.5. While these measures to streamline the process of on-boarding and improving ease of doing business have borne fruit as shown by the increase in number of FPIs registered and their Assets Under Custody (AUC) (refer table below), there is scope for further risk-based easing of regulatory provisions regarding on boarding and ongoing compliances. However, a balanced approach of ease of investment with managing risks associated is preferred. Accordingly, it has been deliberated at length whether a subset of objectively identified and verified low-risk FPIs can be governed under a relatively relaxed onboarding and compliance regime. A more predictable, uniform, and simplified framework would encourage greater long-term foreign participation while retaining appropriate regulatory oversight and safeguards.

2.6. Such objectively identified and verified low-risk FPIs should have a single window for onboarding with access to multiple routes under the existing FEMA framework. We propose to term this as Single Window Automatic and Generalised Access for Trusted Foreign Investors (SWAGAT-FI).

2.7. Such investors looking to invest in the Indian market, in equity as well as debt instruments, under the FPI route are also likely to provide stable capital for long term investment. As per the extant FEMA construct, such investment may fall under different schedules under FEM (Non Debt Instruments) Rules, 2019 (“NDI Rules”) or FEM (Debt Instruments) Regulations, 2019. Leveraging the on-boarding procedure followed for FPI registration for investment under other routes with minimal or no separate on-boarding/ KYC requirements, is being explored in discussions with other regulators and policy makers. The same is expected to save on time, avoid repetitive paperwork and procedural delays, leading to ease of doing business for foreign investors. To start with, the routes governed under regulations issued by SEBI are being considered.

2.8. The proposed initiative of SWAGAT-FI has been appreciated deeply by foreign investors during SEBI’s recent FPI outreach programmes.

3. Data on Foreign Portfolio Investors

4. Recommendations of the FPI Advisory Committee and Comments from Public:

4.1. The proposal to introduce SWAGAT-FI framework and grant relaxations for SWAGAT-FI entities was discussed by SEBI’s FPI Advisory Committee (“the Committee”), in its meeting held on August 07, 2025.

4.2. Pursuant to discussion in the Committee, a Consultation Paper soliciting public comments on the proposal was issued by SEBI on August 08, 2025 and the same is placed at Annexure A.

4.3. Total 123 Comments were received on the aforesaid consultation paper from members of the public including DDPs, Custodians, industry associations, Mutual Funds, Global Custodians and investors including FPIs. A summary of the public response to the proposals is placed at Annexure B.

5. Proposal:

5.1. SWAGAT-FI – Introduction, Identification, and Verification of Eligible Entities

Issues under consideration

5.1.1. In order to achieve objectives mentioned above, it is proposed to provide a new framework — the SWAGAT-FI framework with the following objectives:

5.1.1.1. Provide easier investment access to objectively identified and verified low risk foreign investors

5.1.1.2. Enable a unified registration process across multiple investment routes for such entities

5.1.1.3. Reduce repeated compliance and documentation for such entities

5.1.2. The SWAGAT-FI framework aims to offer a unified, streamlined and consistent access mechanism for certain categories of foreign investors that are verified to have met specified eligibility criteria. This framework will help reduce regulatory complexity, simplify compliance, and enhance India’s attractiveness as an investment destination.

5.1.3. The SWAGAT-FI framework is expected to bring the following benefits: 5.1.3.1. Increased Capital Flows: Simplified access will encourage larger and more stable inflows from institutional investors.

5.1.3.2. Reduced Compliance Burden: Streamlining documentation and processes will lower entry barriers and operational costs for investors.

5.1.3.3. Enhanced Market Depth: Greater participation will improve liquidity in both equity and debt markets, benefiting all market participants.

5.1.3.4. Improved Global Positioning: A modernized access regime will enhance India’s reputation as a competitive and investor-friendly destination.

5.1.3.5. Alignment with Global Best Practices: The proposal aligns with the principle of proportionality in regulations, with a lighter touch for entities verified as low-risk and regulated entities.

5.1.4. Access under the SWAGAT-FI framework is proposed to be provided to foreign investors (referred to as SWAGAT-FIs) that can be considered to be verifiably low risk and can, therefore, be accorded easier access to the Indian capital markets. These entities can be categorised as low risk because they are pools of capital regulated in their home jurisdiction and their ownership is either being held by Government or distributed across numerous investors. Such entities are more transparent in their functioning and diversified in investor base thereby better equipped to mitigate risks associated with concentrated holding such as potential violation of Minimum Public Shareholding (MPS) norms and violation of Substantial Acquisition of Shares and Takeover (SAST) Regulations, 2011. Further, such investors are likely to have long-term investment objectives aligned with India’s capital market development goals.

5.1.5. Given the above, the following categories of foreign investors may be considered for identification as SWAGAT-FIs:

5.1.5.1. Government and Government related investors such as central banks, sovereign wealth funds (SWFs), international or multilateral organizations or agencies including entities controlled or at least 75% directly or indirectly owned by such Government and Government related investor(s)

5.1.5.2. Appropriately regulated Public Retail Funds (PRFs) as under, with demonstrably diversified investor and investment base with independent fund managers, as mandated by their home regulator:

i. Appropriately regulated Mutual funds and Unit Trusts that are open for subscription by retail investors, that verifiably operate as a blind pool with diversified investors and investments under an independent Investment Manager

ii. Appropriately regulated Insurance Companies investing their own funds, without segregated portfolios

iii. Appropriately regulated Pension Funds

5.1.6. As on June 30, 2025, FPIs eligible to be identified as SWAGAT-FIs are estimated to contribute more than 70% of total FPI AUC.

Stakeholders’ views

5.1.7. On the issue of introduction of SWAGAT-FI framework, a total of 18 comments were received and all were in favour (strongly agree, agree, partially agree) of the proposal. On the proposed categories to be eligible under SWAGAT-FI framework, 18 comments were received and 17 were in favour (strongly agree, agree, partially agree) of the proposal. Thus, it is seen from the comments that the proposal has received overall positive feedback from the public.

5.1.8. The lone commenter in disagreement has suggested that the requirement of existing investors having to prove their status to the DDP who would then validate the same, will increase the burden on the investors and lead to operational inconvenience. The commenter has suggested identification of SWAGAT-FI entities on the basis of FPI sub-categories. In this regard, it may be mentioned that only low risk FPIs are proposed to be identified as SWAGAT-FI. It may not be possible to capture this under the extant sub-categorisation and will require a detailed framework for ensuring adherence to eligibility criteria. Accordingly, no change is being made in the proposal in this regard. Note further that the exceptions under the Standard Operating Procedure developed under the August 24, 2023 circular requiring additional disclosures from certain FPI already provides a template to objectively identify and verify FPIs that would qualify under SWAGAT-FI, without any additional burden on such FPI.

5.1.9. The Committee deliberated and concurred with the proposal.

Proposal

5.1.10. In view of the above, it is proposed that a new framework — the SWAGAT-FI (Single Window Automatic & Generalised Access for Trusted Foreign Investors) framework as discussed above, may be provided for eligible foreign investors.

5.1.11. Further, it is proposed that foreign investors listed in Para 5.1.5 above may be considered eligible under the SWAGAT-FI framework. Eligible FPI applicants are proposed to be provided an option to be identified as SWAGAT-FI at the time of initial FPI registration. Existing FPIs that meet the eligibility criteria are also proposed to be permitted to opt for and be identified as SWAGAT-FI.

5.1.12. It is also proposed to issue a jurisdiction wise list for above fund structures on the basis of trust-but-verify principles, in line with the approach adopted for Additional Disclosure Framework approved by the Board in its meeting dated June 28, 2023 and first operationalised through SEBI Circular dated August 24, 2023.

5.2. Proposed Relaxations under SWAGAT-FI framework

5.2.1. To provide ease of compliance, certain relaxations are proposed to be provided for entities eligible under the SWAGAT-FI framework. The same are discussed below.

5.2.2. Single window (optional) FVCI registration alongside FPI registration and easier onboarding for investment in Alternative Investment Funds

Issues under consideration

5.2.2.1. Registration of FPIs and FVCIs is governed under SEBI (Foreign Portfolio Investors) Regulations, 2019 (“FPI Regulations, 2019”) and SEBI (Foreign Venture Capital Investor) Regulations, 2000 (“FVCI Regulations, 2000”), respectively. Incidentally, with a recent amendment to FVCI Regulations, 2000, the eligibility requirements for FVCIs have been aligned with that of FPIs. As discussed above, the SWAGAT-FI framework is being proposed to provide easier access to foreign investors to the Indian securities market.

5.2.2.2. Therefore, entities eligible under SWAGAT-FI framework applying for registration / already registered as FPIs may be permitted to also register as FVCI, without the need for any further documentation. Such facility for registration as FVCI may be provided at the option of the FPI. Registration under both FPI Regulations, 2019 and FVCI Regulations, 2000 will enable SWAGAT-FI to simultaneously invest in listed equity instruments and debt securities of Indian companies as FPI and in unlisted Indian companies engaged in specified sectors and start-ups as FVCI.

5.2.2.3. Further, in terms of Master Circular for Alternative Investment Funds (AIFs) dated May 07, 2024, Investment Manager of a SEBI registered AIF is required to on-board investors including foreign investors, prior to raising funds. Such on-boarding, inter alia, includes ensuring the following:

i. The foreign investor is resident of a country whose securities market regulator is signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding.

ii The foreign investor or its beneficial owner is not named in the sanctions list notified by the United Nations Security Council.

iii. The foreign investor or its beneficial owner is not a resident of a country included in the FATF black list.

5.2.2.4. It may be noted that the above requirements are also applicable to registered FPIs. Therefore, SWAGAT-FIs, by virtue of being registered as FPIs, shall be compliant with the above requirements and be able to have an easier one-stop onboarding as an investor in AIFs.

Stakeholders’ views

5.2.2.5. A total of 15 comments were received on this proposal and all were in favour (strongly agree, agree, partially agree) of the proposal. Thus, it is seen from the comments that the proposal has received overall positive feedback from the public.

5.2.2.6. The Committee also deliberated and concurred with the proposal.

Proposal

5.2.2.7. In view of the above, it is proposed to grant an option to eligible SWAGAT-FIs applying for registration / already registered as FPI to also register as FVCI, without the need for any further documentation.

5.2.3. Relaxation from investment conditions under FVCI Regulations, 2000

Issues under consideration

5.2.3.1. In terms of Regulation 11 of SEBI (FVCI) Regulations, 2000, FVCI is required to, inter alia, comply with the following investment conditions:

“(c) it shall make investments as enumerated below:

i. at least 66.67% of the investible funds shall be invested in unlisted equity shares or equity linked instruments of venture capital undertaking or investee company as defined in clause (o) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Alternative Investment Funds) Regulation, 2012;

ii. not more than 33.33% of the investible funds may be invested by way of:

(a) subscription to initial public offer of a venture capital undertaking or investee company as defined in clause (o) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Alternative Investment Funds) Regulation, 2012 whose shares are proposed to be listed;

b. debt or debt instrument of a venture capital undertaking or investee company as defined in clause (o) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Alternative Investment Funds) Regulation, 2012 in which the foreign venture capital investor has already made an investment by way of equity;

c. preferential allotment of equity shares of a listed company subject to lock in period of one year. Explanation 1. – For the purposes of these regulations, a financially weak company” means a company, which has at the end of the previous financial year accumulated losses, which has resulted in erosion of more than 50% but less than 100% of its networth as at the beginning of the previous financial year;

d. it shall disclose the duration of life cycle of the fund;

e. special purpose vehicles which are created for the purpose of facilitating or promoting investment in accordance with these Regulations.

Explanation. – The investment conditions and restrictions stipulated in clause (c) of regulation 11 shall be achieved by the Foreign Venture Capital Investor by the end of its life cycle”

5.2.3.2. With a view to provide ease of compliance for SWAGAT-FIs, a relaxation from the aforementioned investment conditions can be considered.

Stakeholders’ views

5.2.3.3. This was not an explicit proposal in the consultation paper and discussed in the FAC. However, this proposal is a logical extension of the other two proposals regarding single window registration at para 5.2.2.7 and maintenance of a single unified demat account for SWAGAT-FIs at para 5.2.6.8 of this Memorandum.

Proposal

5.2.3.4. In view of the above and given that both FPI and FVCI investments would be made by the same entity, it is proposed that relaxation from the aforementioned requirement under FVCI Regulations, 2000 that at least 66% of their investments should be in FVCI eligible unlisted investments would not apply to SWAGAT-FIs.

5.2.4. Longer periodicity for continuance of registration and review of KYC Issues under consideration

5.2.4.1. In terms of FPI Regulations, 2019, for continuance of its registration, FPI is required to pay fee and provide requisite documents every three years. Further, in terms of FVCI Regulations, 2000, FVCI is required to pay fee for renewal of its registration every five years.

5.2.4.2. Along with continuance of registration, FPIs and FVCIs are required to undergo periodic KYC review. FPI Regulations, 2019 provide for review of KYC of FPI every year / three years based on the risk categorisation of the FPI. FVCI, on the other hand, are required to undergo KYC review every year / five years. In terms of RBI’s Master Directions on KYC, updation of KYC for low risk customers is carried out once every ten years.

5.2.4.3. With a view to enhance ease of compliance, longer periodicity of 10 years for continuance of registration and review of KYC may be considered for entities eligible under SWAGAT-FI framework. The fee for each such periodic review of KYC shall be as applicable for other FPIs, currently set at USD 2,500.

Stakeholders’ views

5.2.4.4. A total of 18 comments were received on this proposal and 17 comments were in favour (strongly agree, agree, partially agree) of the proposal. Thus, it is seen from the comments that the proposal has received overall positive feedback from the public.

5.2.4.5. The lone commenter in disagreement has suggested that the extant KYC periodicity should be retained as re-KYC helps bring out the factual position regarding any changes that may have occurred but were not reported by the FPI. In this regard, SWAGAT-FIs being low risk FPIs, where their status can also be independently verified by the DDP, a longer periodicity of KYC review is being proposed.

5.2.4.6. The Committee also deliberated and concurred with the proposal.

Proposal

5.2.4.7. In view of the above, it is proposed to increase the periodicity for continuance of registration and review of KYC of SWAGAT-FIs to 10 years. The fee for each such periodic review of KYC shall be as applicable for other FPIs, currently set at USD 2,500.

5.2.5. Increased participation of NRIs, OCIs, Resident Indian individuals Issues under consideration

5.2.5.1. In terms of FPI Regulations, 2019, aggregate contribution from non-resident Indians (NRIs), Overseas Citizens of India (OCIs) and Resident Indian individuals (RIs) in an FPI is capped at 50% of the total corpus of the FPI. Such restriction on participation by NRIs, OCIs and RIs is not applicable under FVCI Regulations, 2000.

5.2.5.2. Even if an overseas Public Retail Fund has minimal number of unit holders that are NRIs/ OCIs/ or RIs, the extant regulations require that they should have adequate processes to verify that such investors do not exceed 50% of the corpus on an ongoing basis. This is an additional compliance burden that is unique to their investments in India.

5.2.5.3. Out of the proposed SWAGAT-FI categories, structures such as regulated Mutual Funds are more likely to have some contribution from NRI, OCI and RIs. Given that such funds would be verifiably being managed as blind pools with diversified investors and investments and an independent investment manager, as mandated by their home regulator, the possible concentration of NRIs, OCIs and RIs in such funds would not pose us any regulatory concern.

5.2.5.4. Therefore, there is a case for providing flexibility to SWAGAT-FIs with respect to participation by NRIs, OCIs and RIs.

Stakeholders’ views

5.2.5.5. A total of 18 comments were received on this proposal and all were in favour (strongly agree, agree, partially agree) of the proposal. Thus, it is seen from the comments that the proposal has received overall positive feedback from the public.

5.2.5.6. The Committee also deliberated and concurred with the proposal.

Proposal

5.2.5.7. In view of the above, and in order to provide greater flexibility to SWAGAT-FIs, it is proposed to remove the cap of 50% on aggregate NRI, OCI and RI contribution in SWAGAT-FIs.

5.2.6. Use of single demat account for investment under various routes Issues under consideration

5.2.6.1. Foreign investors making investment in the country as FPI and FVCI need to have separate demat accounts to hold securities acquired as FPI and FVCI separately.

5.2.6.2. With respect to bank account, RBI in January 2025, permitted use of single rupee account (SNRR account) for such investment by foreign investors as FPI and FVCI and investment in units of investment vehicles.

5.2.6.3. A single demat account is expected to avoid duplication of processes at the time of onboarding and carrying out KYC.

Stakeholders’ views

5.2.6.4. A total of 18 comments were received on this proposal and 12 comments were in favour (strongly agree, agree, partially agree) of the proposal. Thus, it is seen from the comments that the proposal has received overall positive feedback from the public.

5.2.6.5. Commenters in disagreement have highlighted issues related to monitoring, ensuring regulatory oversight, co-mingling of assets, impact of investment made under one investment route on other investment, system complexities and errors related to manual monitoring and have suggested that separate demat accounts may be maintained.

5.2.6.6. The advisory committee of SEBI has also recommended maintenance of separate demat accounts to avoid co-mingling of securities acquired through various routes and to ensure effective monitoring and supervision.

5.2.6.7. However, from a user perspective, it would be beneficial to provide the SWAGAT-FIs with an option of having a single demat account, while ensuring back-end technology solutions to be provided by depositories and custodians to allow for appropriate monitoring of securities acquired through various routes. In any case the 66% minimum threshold for specified unlisted investments prescribed under FVCI Regulations, 2000 would not apply to SWAGAT-FI entities, since they encompass both FPI and FVCI together.

Proposal

5.2.6.8. With a view to further streamline the investment process, it is proposed to permit SWAGAT-FIs to use a single demat account for holding all securities acquired as FPI or FVCI or as foreign investor investing in units of investment vehicles, on an optional basis. Depositories shall be required to provide for adequate tagging to identify the investment as FPI or FVCI or as foreign investor investing in units of investment vehicles.

5.2.7. Implementation of the proposals

5.2.7.1. The proposals described above are proposed to be implemented through amendment to FPI Regulations, 2019 and FVCI Regulations, 2000 and circulars to be issued under the respective regulations. Amendments proposed to be carried out to FPI Regulations, 2019 and FVCI Regulations, 2000 are placed at Annexure C and draft amendment notifications for FPI Regulations, 2019 and FVCI Regulations, 2000 are placed at Annexures D and E, respectively.

5.2.7.2. Considering that the aforesaid proposals require changes to be made in the processes and systems for onboarding, monitoring of compliance requirements, it is proposed that a time period of six months, from the date of relevant notification, may be provided for implementation of the aforesaid proposals.

6. Proposal to the Board:

6.1. In order to facilitate ease of investment by simplifying the onboarding and ongoing compliances, the Board may consider and approve the proposals at Para 5 above.

6.2. The Board may also authorize the Chairman, SEBI, to take such consequential and incidental steps necessary to give effect to the decision of the Board.

Encl:

1. Annexure A – Consultation Paper on introduction of “Single Window Automatic & Generalised Access for Trusted Foreign Investors (SWAGAT-FI)” framework for FPIs and FVCIs dated August 08, 2025 (15 pages)

2. Annexure B – Summary of public comments on the Consultation Paper dated August 08, 2025 (1 page)

3. Annexure C – Amendments proposed to be carried out in FPI Regulations, 2019 and FVCI Regulations, 2000 (3 pages)

4. Annexure D – Draft amendment notifications for FPI Regulations, 2019 (3 pages)

5. Annexure E – Draft amendment notification for FVCI Regulations, 2000 (3 pages)

Annexure-A

Consultation Paper available on SEBI website at the following link:

https://www.sebi.gov.in/reports-and-statistics/reports/aug-2025/consultation-paper-on-introduction-of-single-window-automatic-and-generalised-access-for-trusted-foreign-investors-swagat-fi-framework-for-fpis-and-fvcis95955.html

Annexure-B

Summary of the public comments on ‘Consultation Paper on introduction of “Single Window Automatic & Generalised Access for Trusted Foreign Investors (SWAGAT-FI)” framework for FPIs and FVCIs’

Annexure-C

Amendments to SEBI (Foreign portfolio Investor) Regulations, 2019 and SEBI (Foreign Venture Capital Investor) Regulations, 2000, shall be notified after following the due process.

Annexure-D

Amendment to SEBI (Foreign Portfolio Investor) Regulations, 2019, shall be notified after following the due process.

Annexure-E

Amendment to SEBI (Foreign Venture Capital Investor) Regulations, 2000, shall be notified after following the due process.