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 FPI Master Circular dated May 30, 2024. This framework, implemented via the SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025 notified on December 03, 2025, simplifies on-boarding and ongoing compliance requirements for eligible foreign institutional investors. The framework allows specific categories of appropriately regulated foreign investors from identified jurisdictions to obtain streamlined FPI registration and unified account maintenance across FPI, FVCI, and other foreign investment categories.

Key Points

  • SWAGAT-FI FPIs are exempt from the general restriction on resident Indian individual contributions, provided contributions are made through RBI’s Liberalised Remittance Scheme (LRS) and are in global funds with less than 50% Indian exposure
  • Four categories of investors eligible for SWAGAT-FI registration: government/government-related investors, appropriately regulated retail mutual funds/unit trusts, appropriately regulated insurance companies investing own funds, and appropriately regulated pension funds
  • Retail mutual funds must operate as blind pools with diversified investors and investments, where contributors lack control over day-to-day operations and the investment manager is independent
  • Insurance companies must invest their own funds without segregated portfolios to qualify
  • Applicants must be from identified jurisdictions and regulated by identified statutory authorities as specified by the Custodians and Designated Depository Participants Standards Setting Forum (CDSSF) in consultation with SEBI
  • Existing FPIs meeting SWAGAT-FI requirements can convert by applying to their Designated Depository Participant (DDP)
  • Depositories must provide a single unified accounting/investing experience enabling SWAGAT-FI investors to maintain all securities acquired as FPI, FVCI, or foreign investor in investment vehicle units in a unified manner

Regulatory Changes

The FPI Master Circular has been modified with three key amendments:

  1. New Sub-para 1(ii)(db) of Part A: Exempts SWAGAT-FI FPIs from the general restriction on resident Indian individual contributions, subject to conditions that such contributions must be made through the LRS and in global funds with less than 50% Indian exposure

  2. New Sub-para 2(vi) of Part A: Establishes the comprehensive SWAGAT-FI eligibility framework including:

    • Definition of four eligible investor categories
    • Requirements for retail funds (blind pool structure, diversified investors/investments, independent investment managers)
    • Jurisdiction and regulatory oversight requirements
    • Conversion mechanism for existing FPIs
    • Unified account maintenance mandate for depositories

  3. Modified Sub-para 4(i) of Part A: Updates to continuation requirements for existing FPI registrations (content truncated in source document)

These changes implement the SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025 notified on December 03, 2025.

Compliance Requirements

For Foreign Portfolio Investors:

  • Existing FPIs seeking SWAGAT-FI status must make application to their DDP demonstrating eligibility under one of the four specified categories
  • SWAGAT-FI applicants must verify they are from identified jurisdictions and regulated by identified statutory authorities per CDSSF standards
  • Retail mutual fund applicants must demonstrate blind pool structure, diversified investor base, and independent investment management
  • Insurance company applicants must confirm investment of own funds without segregated portfolios
  • SWAGAT-FI FPIs with resident Indian contributions must ensure compliance with LRS and the 50% Indian exposure limit in global funds

For Designated Depository Participants and Custodians:

  • Process SWAGAT-FI registration applications and conversions from existing FPIs
  • Verify applicant eligibility against the four specified categories
  • Confirm jurisdiction and regulatory oversight requirements per CDSSF standards
  • Apply the CDSSF Standard Operating Procedure for identified jurisdictions and regulatory bodies

For Custodians and Designated Depository Participants Standards Setting Forum (CDSSF):

  • Frame and adopt Standard Operating Procedure specifying the list of identified jurisdictions and identified statutory authorities/regulatory bodies in consultation with SEBI

For Depositories:

  • Implement systems to 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 a unified manner
  • Support seamless integration across different investment categories for SWAGAT-FI entities

For Stock Exchanges and Clearing Corporations:

  • Update systems and procedures to accommodate SWAGAT-FI FPI transactions and unified account structure

Important Dates

  • December 03, 2025: SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025 notified
  • January 16, 2026: Circular issued modifying FPI Master Circular to implement SWAGAT-FI framework
  • May 30, 2024: Original FPI Master Circular (SEBI/HO/AFD/AFD-PoD2/P/CIR/P/2024/70) issued, now amended
  • September 10, 2025: Previous amendment to FPI Master Circular (SEBI/HO/AFD/AFD-PoD-3/P/CIR/2025/127) referenced in current modifications

No specific implementation deadlines are mentioned in the circular; changes appear effective from the date of issuance (January 16, 2026).

Impact Assessment

Market Access Impact: The SWAGAT-FI framework significantly liberalizes foreign institutional investor access to Indian markets by creating a streamlined registration pathway for trusted institutional investors. Government investors, regulated retail funds, insurance companies, and pension funds from identified jurisdictions will benefit from simplified on-boarding, potentially increasing foreign institutional participation in Indian securities markets.

Operational Impact: The unified account maintenance requirement represents a major operational change for depositories, enabling SWAGAT-FI investors to seamlessly hold securities across FPI, FVCI, and other foreign investment categories in a single account structure. This reduces administrative complexity and enhances investment flexibility for eligible foreign investors.

Compliance Impact: While the framework simplifies on-boarding for eligible investors, it creates new compliance obligations for DDPs and custodians to verify eligibility criteria, particularly the blind pool requirements for retail funds and the jurisdiction/regulatory oversight requirements. The CDSSF must develop detailed SOPs specifying identified jurisdictions and regulatory bodies, which will determine the practical scope of the framework.

Resident Indian Participation: The exemption from general restrictions on resident Indian contributions for SWAGAT-FI FPIs, subject to LRS and 50% Indian exposure limits, creates new opportunities for Indian residents to participate in global funds while maintaining regulatory oversight through existing LRS mechanisms.

Competitive Impact: The framework may create competitive advantages for investors from identified jurisdictions and those meeting the specific structural requirements (blind pools, independent management), potentially influencing fund structuring decisions by foreign asset managers seeking Indian market access.

Impact Justification

Major regulatory reform introducing simplified registration and compliance framework for trusted foreign institutional investors, affecting FPIs, DDPs, custodians, depositories, and stock exchanges with significant operational and market access implications.