SEBI may open ‘automatic window’ for foreign investors to stem equity outflows

The move comes at a time when FPIs have withdrawn more than Rs 83,000 crore from Indian equities since July, spooked by global volatility and tariff tensions.

Foreign portfolio investors (FPIs) could soon get a smoother route into Indian markets, with the Securities and Exchange Board of India (Sebi) set to consider an ‘automatic window’ at its board meeting on September 12, people familiar with the matter told Economic Times.

The automatic window would offer simplified registration and reduced compliance requirements, significantly improving ease of doing business for large global funds.

A diplomatic fast track for investors

The new system has been described as akin to the 'diplomatic channel at airports,' streamlining entry for select categories of FPIs. If approved, it would apply to about 70 percent of India’s 11,913 registered FPIs, covering heavyweight sovereign wealth funds and pension managers such as:

GIC of Singapore
Abu Dhabi Investment Authority (ADIA)
Norway’s Government Pension Fund
Canada Pension Plan Investment Board (CPPIB)
Public retail funds like Goldman Sachs and Morgan Stanley

Collectively, FPIs manage assets worth Rs 81 lakh crore in India.

Stem the outflow of global capital

The move comes at a time when FPIs have withdrawn more than Rs 83,000 crore from Indian equities since July, spooked by global volatility and tariff tensions.

“If overseas investors obtain a kind of ‘diplomatic passport,’ it would make it easier for them to invest in our markets,” Sebi whole-time member Ananth Narayan said at a recent event.

Narayan, along with Sebi chairman Tuhin Kanta Pandey, met more than 250 FPIs in Hong Kong and Singapore last week to understand their concerns and investment hurdles.

How the automatic window will work

Currently, FPIs enter through multiple routes depending on their investor type, investment vehicle and investee company. Each has separate documentation and compliance requirements, often making the process cumbersome.

Under the proposed framework, the automatic window would unify registration across all these routes for FPIs that are at least 75 percent government-owned or regulated in their home jurisdictions.

While existing routes will continue, the new mechanism would drastically cut down duplication and paperwork, giving large global investors faster and more predictable access.

Other reforms on Sebi’s table

Alongside the FPI window, the ET report added that Sebi’s board will also discuss a proposal to introduce a dedicated quota for domestic insurance companies and pension funds in the anchor book of IPOs.

Currently, these institutions participate as anchor investors but do not enjoy a reserved quota like domestic mutual funds. A change here could deepen India’s IPO markets and bring more long-term institutional participation.