Sebi Simplifies Rules for Foreign Investors in Indian Government Bonds

Encouraging More Foreign Investment in India’s Debt Market

Sebi has simplified the rules for Foreign Portfolio Investors (FPIs) who want to invest in Indian government securities (G-Secs). This change is expected to bring in more long-term foreign investment into India’s debt markets.

Easier Onboarding and Less Paperwork

This decision was taken at Sebi’s board meeting. It will make the onboarding process simpler and reduce the amount of paperwork needed. This change is happening when more people around the world are showing interest in India’s debt market.

Sebi said, “We want to make doing business easier. We will use a risk-based approach and the right amount of regulation. The board agreed to relax some rules for all current and future FPIs that only invest in G-Secs.”

Current Ways to Invest

Right now, FPIs can invest in Indian debt in three ways:

• General route
• Voluntary Retention Route (VRR)
• Fully Accessible Route (FAR)

Both FAR and VRR allow investments with very few restrictions.

New Changes and Relaxations

As part of the new changes, Sebi has made a few updates:

• KYC review timelines for G-Sec FPIs will now match RBI norms. This means less periodic compliance work.
• Investors using the FAR route won’t have to share investor group details anymore.
• Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Resident Indian individuals can now be part of government securities-focused FPIs (GS-FPIs) without the usual restrictions.

However, the current rules under the Liberalised Remittance Scheme and limits for global funds with less than 50% Indian exposure will still apply.

Same Reporting Time for All

Sebi has set a uniform 30-day window for reporting all major changes by such investors. This replaces the current rule, which varies between 7 and 30 days depending on the type of change.

These changes will apply during onboarding and any future switch between GS-FPI and other FPI categories. They are subject to conditions that Sebi may specify.

Global Bond Indices and What’s Ahead

India’s inclusion in global bond indices like those by JP Morgan, Bloomberg, and FTSE is expected to attract more foreign interest in G-Secs. According to Sebi data, FPI investment in FAR-eligible bonds had already crossed Rs 3 lakh crore ($35.7 billion) by March 2025.