Description

SEBI introduces SWAGAT-FI framework to simplify on-boarding and ongoing compliances for eligible Foreign Portfolio Investors including government investors, 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 SEBI (Foreign Portfolio Investors) Regulations, 2019. This framework simplifies the on-boarding and ongoing compliance requirements for eligible FPIs including government/government-related investors, appropriately regulated retail mutual funds, insurance companies, and pension funds from identified jurisdictions. The framework enables unified account maintenance across FPI, FVCI, and other foreign investment vehicles.

Key Points

  • SWAGAT-FI framework notified through SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025 on December 03, 2025
  • Modifies the FPI Master Circular (SEBI/HO/AFD/AFD-PoD2/P/CIR/P/2024/70 dated May 30, 2024)
  • Resident Indian individual contributions to SWAGAT-FI FPIs must be through RBI’s LRS route and limited to global funds with less than 50% Indian exposure
  • Eligible entities include government investors, public retail mutual funds, insurance companies investing own funds, and pension funds
  • Applicants must be from identified jurisdictions and regulated by identified statutory authorities (list to be defined by CDSSF in consultation with SEBI)
  • Public retail funds must operate as blind pools with diversified investors and independent investment managers
  • Existing FPIs meeting SWAGAT-FI requirements can convert by applying to their DDP
  • Depositories to facilitate unified accounting for all securities held as FPI, FVCI, or other foreign investor categories

Regulatory Changes

Amendment to Para 1 of Part A (Contribution by Resident Indians)

New sub-para (db) inserted: SWAGAT-FI FPIs are exempt from certain contribution restrictions, but resident Indian contributions must comply with:

  • RBI’s Liberalised Remittance Scheme (LRS)
  • Investment only in global funds with less than 50% Indian exposure

Amendment to Para 2 of Part A (New Category Addition)

New sub-para (vi) creates SWAGAT-FI FPI category with following eligibility criteria:

Eligible Entities:

  1. Government or government-related investors (per Regulation 5(a)(i) of FPI Regulations, 2019)
  2. Appropriately regulated mutual funds or unit trusts that are:
    • Open for retail investor subscription without accredited investor requirements
    • Operating as blind pools with diversified investors and investments
    • Managed by investment managers independent from contributors
    • Contributors do not control day-to-day operations
  3. Appropriately regulated insurance companies investing own funds without segregated portfolios
  4. Appropriately regulated pension funds

Jurisdiction Requirements:

  • Must be established in identified jurisdictions
  • Regulated by identified statutory authority/regulatory body in such jurisdiction
  • List of identified jurisdictions and regulators to be specified in Standard Operating Procedure by CDSSF in consultation with SEBI

Conversion Process:

  • Existing FPIs meeting SWAGAT-FI requirements may convert by applying to their Designated Depository Participant (DDP)

Unified Account Framework:

  • Depositories must facilitate single unified accounting/investing experience
  • Enables maintenance of all securities acquired as FPI, FVCI, or foreign investor in investment vehicle units in unified manner

Amendment to Para 4 of Part A

Sub-para (i) modified regarding FPI registration continuation (full text not provided in circular excerpt)

Compliance Requirements

For Foreign Portfolio Investors (FPIs)

  • Eligible FPIs wishing to utilize SWAGAT-FI framework must assess eligibility against specified criteria
  • Application for conversion to SWAGAT-FI status to be submitted to their DDP
  • Resident Indian contributions must comply with LRS and 50% Indian exposure limit

For Designated Depository Participants (DDPs) and Custodians

  • Process applications for SWAGAT-FI FPI registration and conversions
  • Implement unified accounting framework through depositories
  • Participate in CDSSF to develop Standard Operating Procedures defining identified jurisdictions and regulatory bodies

For Depositories

  • Establish and maintain unified accounting system for SWAGAT-FI FPIs
  • Enable seamless maintenance of securities across FPI, FVCI, and other foreign investment categories
  • Facilitate single window experience for SWAGAT-FI investors

For Stock Exchanges and Clearing Corporations

  • Implement systems to recognize and process SWAGAT-FI FPI transactions
  • Ensure compliance with modified FPI Master Circular provisions

Important Dates

  • December 03, 2025: SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025 notified
  • January 16, 2026: Circular issued (Ref: HO/19/34/14(5)2025-AFD-POD2/I/2703/2026)
  • May 30, 2024: Original FPI Master Circular issued (SEBI/HO/AFD/AFD-PoD2/P/CIR/P/2024/70)
  • September 10, 2025: Previous modification to FPI Master Circular (SEBI/HO/AFD/AFD-PoD-3/P/CIR/2025/127)

Impact Assessment

Market Impact

  • Positive for Foreign Investment Flows: Simplified registration and compliance processes likely to attract more institutional foreign capital from trusted jurisdictions
  • Enhanced Market Access: Unified accounting framework reduces operational complexity for foreign investors managing multiple investment routes
  • Broader Investor Base: Inclusion of retail mutual funds, pension funds, and insurance companies expands eligible foreign investor categories

Operational Impact

  • DDPs and Custodians: Need to establish new processing workflows for SWAGAT-FI applications and conversions
  • Depositories: Significant system development required to implement unified accounting infrastructure
  • Existing FPIs: Opportunity to streamline operations through conversion to SWAGAT-FI status if eligible

Regulatory Impact

  • Simplified Compliance: SWAGAT-FI framework reduces ongoing compliance burden for eligible trusted investors
  • Risk-Based Approach: Framework focuses on regulated entities from identified jurisdictions, balancing ease of access with investor quality
  • Standard Operating Procedures: CDSSF to develop detailed implementation guidelines defining eligible jurisdictions and regulators

Strategic Considerations

  • Framework aligns with India’s objective to attract long-term institutional capital from reputable sources
  • Blind pool requirement ensures diversification and reduces concentration risks
  • Independence of investment managers from contributors provides governance safeguards
  • Unified accounting reduces fragmentation in foreign investment routes (FPI/FVCI/other vehicles)

Impact Justification

Major regulatory framework introduction that streamlines FPI registration and compliance process for eligible trusted foreign investors, affecting all FPIs, DDPs, custodians, depositories, and stock exchanges.