SEBI’s SWAGAT-FI Framework for Low-Risk Foreign Investors: Meaning, Objectives, Benefits and Impact

In a significant move to enhance India’s attractiveness as a global investment destination, the Securities and Exchange Board of India (SEBI) has introduced the SWAGAT-FI Framework (Simplified and Welcoming Access for Global Investors – Foreign Investors). The framework is specifically designed for objectively identified low-risk foreign investors, aiming to simplify compliance, reduce operational friction, and promote long-term capital participation in Indian financial markets.

SEBI operationalised SWAGAT-FI by amending the Foreign Portfolio Investor (FPI) Regulations and Foreign Venture Capital Investor (FVCI) Regulations, marking a decisive shift towards risk-based and proportionate regulation.

What is the SWAGAT-FI Framework?

The SWAGAT-FI Framework is a regulatory mechanism that provides simplified, unified and long-term market access to low-risk foreign institutional investors. It allows eligible entities to operate seamlessly across multiple investment routes with minimal duplication of documentation and compliance requirements.

As of June 2025, SWAGAT-FIs account for over 70% of total FPI Assets Under Custody (AUC), underlining their systemic importance to India’s capital markets.

Objectives of SWAGAT-FI

SEBI’s SWAGAT-FI framework has the following key objectives:

• Easier investment access for objectively identified and verified low-risk foreign investors

• Unified registration across multiple investment routes (FPI and FVCI)

• Reduction in repetitive compliance and documentation

• Lower operational friction for large institutional investors

• Encouraging stable, long-term foreign capital participation in Indian markets

Who are Eligible Low-Risk Investors under SWAGAT-FI?

The framework applies to well-regulated, transparent and systemically important investors, including:

1. Government and Government-Related Investors

• Central Banks

• Sovereign Wealth Funds

• International or Multilateral Organisations

• Entities directly or indirectly owned 75% or more by governments

2. Public Retail Funds (PRFs)

• Appropriately regulated funds

• Diversified investor and investment base

• Independent fund managers

• Mandated oversight by home-country regulators

3. Mutual Funds and Unit Trusts

• Open for subscription by retail investors

• Appropriately regulated in their home jurisdictions

4. Insurance Companies

• Appropriately regulated

• No segregated portfolios

5. Pension Funds

• Subject to strict regulatory oversight

• Long-term investment horizon

Ease of Compliance under the SWAGAT-FI Framework

1. Dual Registration as FPI and FVCI

Under SWAGAT-FI, eligible entities:

• Can register simultaneously as FPIs and FVCIs

• No additional documentation is required for FVCI registration if FPI status already exists

This enables investors to:

• Invest in listed equities and debt instruments as FPIs

• Invest in unlisted companies and start-ups in designated sectors under FVCI norms

2. Extended Validity of Registration

• 10-year validity for registration renewal, KYC and fee payments

• Significantly longer than the current 3–5 year cycle applicable to other investors

This reduces regulatory uncertainty and repetitive administrative procedures.

Key Benefits of the SWAGAT-FI Framework

1. Increased Capital Flows

Simplified and predictable access is expected to attract larger, stable and long-term institutional investments into Indian equity, debt and start-up ecosystems.

2. Reduced Compliance Burden

By eliminating duplication of documentation and registrations, the framework:

• Lowers operational costs

• Reduces regulatory fatigue

• Improves ease of doing business for global investors

3. Enhanced Market Depth and Liquidity

Greater participation by large institutional investors will:

• Improve liquidity in equity and debt markets

• Enhance price discovery

• Stabilise markets during volatility

4. Improved Global Positioning of India

SWAGAT-FI strengthens India’s image as:

• A modern, investor-friendly market

• A jurisdiction aligned with international regulatory standards

5. Alignment with Global Best Practices

The framework follows the principle of proportionality in regulation, providing:

• Light-touch regulation for low-risk, well-regulated entities

• Strong oversight where risks are higher

Significance for India’s Capital Markets

The SWAGAT-FI framework reflects SEBI’s transition from a one-size-fits-all approach to a risk-based regulatory architecture. By recognising the credibility of globally regulated institutions, India positions itself competitively against other emerging and developed markets.

The framework is expected to:

• Boost foreign portfolio and venture capital investments

• Support India’s start-up and innovation ecosystem

• Strengthen India’s role in global capital allocation

Conclusion

SEBI’s SWAGAT-FI Framework is a landmark reform that balances market integrity with investor convenience. By easing compliance for low-risk foreign investors, enabling dual registrations, and extending registration validity, SEBI has created a robust, future-ready investment access regime.

As India aspires to become a $5 trillion economy, SWAGAT-FI is poised to play a critical role in mobilising global capital while reinforcing regulatory credibility and market stability.

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