Mutual fund industry seeks increase in overall overseas limit

Mutual fund industry has once again raised the issue of enhancement in overseas limit for investment. RBI has fixed a cap on the amount Indian mutual fund industry can invest in foreign securities, with a total industry-wide limit of $7 billion, and $1 billion cap per mutual fund house. A separate $1 billion limit is fixed additionally for investments in overseas exchange-traded funds (ETFs).
The mutual fund industry has been urging for increasing this limit. Though this limit is under the control of Reserve Bank of India, the industry is seeking this relaxation, so that mutual funds can explore further overseas investment opportunities.

Kalpen Parekh, MD& CEO, DSP Mutual Fund raised this issue at Moneycontrol Mutual Fund Summit 2025 on Monday. He said, "The global space is useful for investor outcomes, but right now the limits are shut". He added that SEBI is also trying to work with RBI on this issue.

Referring for the enhanced limit in context of managing the huge inflows coming via SIP from domestic investors, he said that if limit is increased then it can give a reasonable pressure buffer relief.
Similar sentiments have been echoed by various industry participants in the past. Industry insiders say that increasing this limit should not be a problem as RBI has huge forex reserves. As per latest data, RBI has forex reserves of $698.8 billion. Industry insiders have also approached SEBI in this regard in past, but there was no revision in the limit.

Data suggests there are around 22 domestic schemes that have invested a part of their funds in global stocks apart from their exposure in domestic equities. Due to this cap, there are only a handful of old schemes with an exposure to global stocks.