Description

SEBI introduces SWAGAT-FI framework to simplify onboarding and ongoing compliances for eligible Foreign Portfolio Investors including government entities, retail mutual funds, insurance companies, and pension funds from identified jurisdictions.

Summary

SEBI has introduced the Single Window Automatic and Generalised Access for Trusted Foreign Investors (SWAGAT-FI) framework through amendments to the FPI Master Circular. This framework simplifies onboarding and ongoing compliances for eligible foreign investors including government entities, appropriately regulated retail mutual funds, insurance companies, and pension funds from identified jurisdictions. The circular modifies the FPI Master Circular to accommodate SWAGAT-FI registrations and enables depositories to provide a unified accounting experience for all securities held by such investors.

Key Points

  • SWAGAT-FI framework introduced via SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025 notified on December 03, 2025
  • Four categories eligible for SWAGAT-FI FPI registration: government/government-related investors, appropriately regulated retail mutual funds/unit trusts, insurance companies investing own funds, and pension funds
  • Resident Indian contribution restrictions do not apply to SWAGAT-FI FPIs, but contributions must be through RBI’s LRS route and only in global funds with less than 50% Indian exposure
  • Retail mutual funds must operate as blind pools with diversified investors and investments, with independent investment managers
  • Applicants must be from identified jurisdictions and regulated by identified statutory authorities as per CDSSF Standard Operating Procedure
  • Existing FPIs meeting SWAGAT-FI requirements can convert by applying to their DDP
  • Depositories must facilitate single unified accounting for all securities acquired as FPI, FVCI, or foreign investor in investment vehicles

Regulatory Changes

Amendments to FPI Master Circular:

  1. Para 1(ii)(db) Addition: SWAGAT-FI FPIs exempted from standard resident Indian contribution restrictions. However, such contributions must:

    • Be made through the Liberalised Remittance Scheme (LRS) notified by RBI
    • Be in global funds whose Indian exposure is less than 50%

  2. Para 2(vi) Addition - SWAGAT-FI Eligibility Criteria:

    • Government or government-related investors per Regulation 5(a)(i) of FPI Regulations, 2019
    • Appropriately regulated mutual funds/unit trusts open to retail investors without specific investor type requirements (like accredited investors), operating as blind pools with diversified portfolios where contributors lack control over day-to-day operations
    • Appropriately regulated insurance companies investing own funds without segregated portfolios
    • Appropriately regulated pension funds

  3. Jurisdiction and Regulatory Requirements:

    • Public retail funds must be established in identified jurisdictions
    • Must be regulated by identified statutory authority/regulatory body in such jurisdictions
    • List of identified jurisdictions and authorities to be defined in CDSSF Standard Operating Procedure in consultation with SEBI

  4. Para 4(i) Modification: Continuation provisions for existing FPIs modified (content truncated in source document)

Compliance Requirements

For Eligible Foreign Investors:

  • Meet specific criteria for SWAGAT-FI category (government entity, retail mutual fund, insurance company, or pension fund)
  • Ensure establishment and regulation in identified jurisdictions by identified authorities
  • For retail funds: maintain blind pool structure with diversified investors and independent investment management
  • Resident Indian contributors must use LRS route and invest only in global funds with <50% Indian exposure

For Existing FPIs:

  • May apply for conversion to SWAGAT-FI FPI status through their Designated Depository Participant (DDP)
  • Must meet all SWAGAT-FI eligibility requirements

For Depositories:

  • Must facilitate single unified accounting/investing experience for SWAGAT-FI investors
  • Enable maintenance of all securities acquired as FPI, FVCI, or foreign investor in investment vehicles in unified manner

For DDPs and Custodians:

  • Implement provisions through CDSSF Standard Operating Procedure
  • Process SWAGAT-FI registration and conversion applications
  • Facilitate unified account maintenance

For CDSSF:

  • Frame and adopt Standard Operating Procedure specifying identified jurisdictions and regulatory authorities
  • Develop SOP in consultation with SEBI

Important Dates

  • December 03, 2025: SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025 notified
  • January 16, 2026: Circular issued modifying FPI Master Circular
  • Effective Date: Immediate effect from circular date (January 16, 2026)
  • Reference Circular: SEBI/HO/AFD/AFD-PoD2/P/CIR/P/2024/70 dated May 30, 2024 (FPI Master Circular)
  • Prior Amendment: SEBI/HO/AFD/AFD-PoD-3/P/CIR/2025/127 dated September 10, 2025

Impact Assessment

Market Impact:

  • High Positive Impact: Expected to significantly increase foreign portfolio investment by simplifying entry barriers for trusted institutional investors
  • Enhanced liquidity potential from government entities, pension funds, and large insurance companies
  • Streamlined process may attract larger volumes from retail mutual funds in developed markets

Operational Impact:

  • For Investors: Reduced compliance burden and simplified onboarding for SWAGAT-FI eligible entities; unified account experience across FPI and FVCI investments eliminates operational silos
  • For Depositories: Requires system enhancements to provide single unified accounting across multiple investment categories
  • For DDPs/Custodians: Need to implement new registration workflows and conversion processes; must adopt CDSSF Standard Operating Procedure

Regulatory Impact:

  • Aligns with global best practices for trusted institutional investor frameworks
  • Creates differentiated compliance pathway for low-risk foreign investors
  • Reduces regulatory scrutiny requirements for government-backed and highly regulated entities
  • Liberalization of resident Indian contribution norms for SWAGAT-FI (via LRS with 50% Indian exposure cap) balances market access with capital flow management

Compliance Impact:

  • Simplified ongoing compliance requirements for SWAGAT-FI category investors
  • Conversion option provides existing FPIs flexibility to migrate to lighter compliance regime
  • Clear eligibility criteria based on investor type and jurisdiction reduces ambiguity

Strategic Considerations:

  • Jurisdiction identification by CDSSF will be critical - likely to include major financial centers with robust regulatory frameworks
  • Framework positions India competitively for attracting long-term institutional capital
  • May lead to market share shifts as eligible FPIs convert to SWAGAT-FI status for operational efficiency

Impact Justification

Major regulatory framework introduction that significantly simplifies FPI registration and compliance processes for trusted foreign investors, creating a unified investment experience across FPI and FVCI categories.