The Securities and Exchange Board of India (Sebi) is weighing a shift that could significantly lower costs for foreign portfolio investors (FPIs)—allowing them to settle all their equity trades on a net basis at the end of each day.
“We are examining whether netting of settlements for trades executed on a single day can be permitted,” chairperson Tuhin Kanta Pandey said at the Goldman Sachs 14th India CIO Conference 2025 on Wednesday, adding that the move would ease operations and reduce costs for FPIs at a time when overseas outflows have accelerated.
At present, FPIs must settle every buy and sell order separately—even when trading the same stock during the day—forcing them to fund each purchase fully and deliver shares for each sale that increases funding needs and transaction costs.
The proposed shift away from this gross-settlement system will remove a major friction point for large global investors and help India attract more institutional flows.
India has witnessed a surge in FPI outflows, with foreign investors having pulled out over ₹1.4 trillion from the markets since the start of the year, against a net inflow of ₹4.27 billion in 2024, according to data from the National Securities Depository Ltd.
Digitisation to cut registration time to days
The proposed change is part of a wider set of reforms aimed at creating a low-friction environment for foreign investors. Pandey said Sebi is moving towards end-to-end digitization of the FPI registration process, using digital signatures to make onboarding paperless and shorten approval timelines from months to days.
To enhance service quality, a second registration platform is being built by the Central Depository Services Ltd, breaking the existing single-platform structure.
Pandey said Sebi may also allow Single Window Automatic & Generalized Access for Trusted Foreign Investors (SWAGAT-FI), foreign investors under the new and eased FPI framework, to invest in India through other FEMA (Foreign Exchange Management Act) prescribed routes without additional compliances. A key feature of SWAGAT is the option for investors to use a single demat account for all securities, whether acquired as an FPI or a foreign venture capital investor.
“We are engaged with the RBI (Reserve Bank of India) and the ministry of finance to take forward these initiatives”, said the chairperson.
Despite rising domestic participation, Pandey said FPIs remain central to India’s capital markets. As of September 2025, FPIs’ assets held by custodians on their were at $876 billion, with foreign investors holding around 17% of listed Indian companies, he said.
Sebi has implemented several measures over the last few years to address FPIs’ concerns. These include a revamped, faster registration module, a light-touch regulatory regime for FPIs investing only in government securities, an expanded anchor investor framework in initial public offerings, and a comprehensive overhaul of the block-window framework to deepen liquidity for large institutional trades.
Pandey said the next phase of reforms aims to create a “best-in-class” experience for offshore investors, even as domestic inflows grow to become a major force in the market.
