New foreign fund registrations in India surge, defying broader FPI sell-off

In contrast to sell-off in equities, FPIs net invested around Rs 60,000 crore in India debt market through fully accessible route(FAR) in 2025 so far, NSDL data showed.

New foreign funds continue to queue up for India trading licences even as existing offshore funds have been trimming their exposure. According to official data, in the first eight months of 2025, 287 new foreign portfolio investors (FPIs) registered in India, taking the total count to 12,048

Even the crackdown by the Securities and Exchange Board of India (SEBI) against Jane Street has seemingly not spooked perspective investors. As many as 138 FPIs have registered in India since July when the market regulator issued an order against Jane Street.

The development comes despite a broader sell-off by foreign funds, with off-shore investors offloading shares worth Rs 1.5 lakh crore  in the first nine months of 2025, data showed. The benchmark Sensex has remained largely flat rising by about 2.3 percent in 2025 so far.

“There are several compelling factors due to which FPIs continue to set up and invest in India. Investors look for markets that offer geopolitical stability, robust economic growth, and attractive returns. India stands out on all these fronts. The country’s strong macroeconomic fundamentals, ongoing policy reforms, and resilient corporate earnings generate positive sentiment among global investors,” said Suresh Swamy, Partner, Price Waterhouse & Co LLP.

Market participants say India is now attracting newer kinds of funds. In the period between 2020 and 2024, dozens of foreign funds set up shop in India to trade derivatives.

At present, India is seeing debt funds queue up for FPI licences as the country gets included in  global debt indices.

In June 2024, India was included in the prestigious JP Morgan Bond Index — India’s first inclusion in global debt indices. In October, FTSE Russell announced India would be included in its global bond market indices from September 2025 but no announcement has come so far.

India’s debt market has been attracting foreign fund flows despite equity sell off. FPIs have net invested around Rs 60,000 crore in India debt market through fully accessible route (FAR) in 2025, so far, NSDL data shows.

“The inclusion of Indian government bonds into global bond indices and upgraded S&P rating are also significant factors to the rising interest from global investors. The new FPIs registering in India are predominantly funds with a mandate to invest in emerging market equities and bonds. These include global asset managers, pension funds, and sovereign wealth funds,” Swamy said.

The pace of FPI additions seems to have slowed compared to last year when 618 new FPIs registered in India, the highest in at least six years. In 2023, 168 off-shore funds entered India, while in 2022 the number stood at 604, data compiled from the market regulator shows.

In terms of value of assets, US-based funds continue to be the largest investors, accounting for over a third of overall FPI investments in India.