SEBI approves 100% NRI & OCI participation in FPIs in IFSC, GIFT City


  • The Securities & Exchange Board of India (SEBI) has made a significant decision to allow Foreign Portfolio Investors (FPIs) based in the IFSC at GIFT City to accept up to 100% contributions from Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Resident Indians (RIs).
  • This approval came during SEBI’s board meeting on April 30, 2024, following a proposal from its Consultation Paper dated August 25, 2023.
  • Subsequently, the International Financial Services Centre Authority (IFSCA) issued a circular on May 2, 2024, outlining the eligibility criteria and KYC parameters for these FPIs.


  • Under foreign exchange laws, NRIs and OCIs have different portfolio investment regimes.
  • NRI/OCI investments were restricted in 2003 when Overseas Corporate Bodies (OCBs) were deregistered, owing to fears of potential abuse for tax evasion and money laundering.
  • 2018 SEBI circular restricted NRIs/OCIs from being beneficial owners of FPIs.
  • Current SEBI regulations impose strict limits to single NRI/OCI/RI contributions below 25% and aggregate contributions below 50%.
  • Despite high remittance levels, NRI/OCI participation in capital markets is low due to investment restrictions.
  • Monitoring and divestment risks discourage FPIs from accepting NRI/OCI contributions.
  • Policy revision is necessary to increase NRI/OCI investment in Indian capital markets.


  • Concerns about misuse by Indian promoters for bypassing public shareholding requirements.
  • IFSCA’s domestic regulatory oversight provides quick access to investor details, alleviating SEBI’s concerns.
  • SEBI created an exception for FPIs in IFSC, GIFT City to accept 100% contributions from NRIs, OCIs, and RIs.


Two alternative routes for FPIs to allow 100% NRI/OCI/RI participation:
Alternative Route 1:
  • FPIs must submit PAN copies or specified documents of all NRI/OCI/RI individual constituents.
  • For indirect holdings, FPIs must disclose the economic interests of NRI/OCI/RI individuals.
Alternative Route 2:
  • Pool all investor contributions into a single investment vehicle registered as an FPI, with no side vehicles.
  • Fund must have a minimum of 20 investors, with no single investor contributing more than 25%.
  • A maximum of 20% of the fund’s corpus can be invested in any single Indian listed entity.
  • Investment decisions must be made by an independent investment manager, with no influence from investors.
  • The investment manager must be an Asset Management Company of a SEBI-registered Mutual Fund sponsored by an RBI-regulated bank.
  • FPIs must provide detailed beneficial ownership information if they hold more than 33% of their Indian equity AUM in a single Indian corporate group. They and their investor group hold more than INR 25,000 crore (~USD 3 billion) of equity AUM in Indian markets.


  • SEBI and IFSCA’s measures broaden the investor base and enhance financial inclusivity in Indian markets.
  • Creates new opportunities for portfolio managers to offer tailored solutions to NRI and OCI clients, reducing their KYC and reporting burdens.
  • Positions IFSC, GIFT City as a preferred offshore jurisdiction, supporting the influx of foreign capital into Indian markets, particularly following amendments to the India-Mauritius DTAA.

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