SEBI Eases Investment Path for NRIs: Expanding Opportunities in Indian Markets through GIFT City

05 May 2024

The Securities and Exchange Board of India (SEBI), India's market regulator, has made it easier for non-resident Indians (NRIs) to invest in Indian markets. Sebi has now permitted Foreign Portfolio Investors (FPIs) based in GIFT City to accept unlimited investments from Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs). This allows for greater participation from the Indian diaspora in Indian markets.

Previously, NRIs and OCIs could only invest up to 50% in a Foreign Portfolio Investor (FPI). They can now own up to 100% of a global fund set up in GIFT City, Gujarat's special economic zone. This allows NRIs to invest a larger amount of their money in Indian stocks via global funds.

However, if the fund's equity assets under management (AUM) exceed 33% in a single Indian group, they must provide detailed disclosures about their investors. Disclosures will be required if the fund and its investor group have more than Rs 250 billion (~$3 billion) in equity assets under management in India.

The funds must either submit their investors' identity documents, such as passports or permanent account numbers (PANs), to the Securities and Exchange Board of India (SEBI) or adhere to the framework established by the International Financial Services Regulatory Authority, which oversees financial services in GIFT City.

The Indian government has marketed GIFT City as a "gateway for global capital and financial services for the economy". In the last three years, approximately 80 fund managers have established funds at GIFT City, with commitments summing up to $30 billion and investments exceeding $2.93 billion.