Sebi Introduces SWAGAT–FI Framework To Streamline Investment From Trusted Foreign Investors

Foreign institutional investors (FIIs) have remained net sellers of Indian equities in the first 15 days of 2026. Notably, the trend of FIIs selling Indian equities has continued since July 2025. However, capital market regulator, the Securities and Exchange Board of India (Sebi) is seeking to facilitate the return of FIIs to the Indian market.

What Is The SWAGAT-FI Framework

In a bid to ease the on-boarding and ongoing compliance of trusted foreign investors, Sebi has unveiled the new framework for Single Window Automatic and Generalised Access for Trusted Foreign Investors (SWAGAT-FI) through a circular on January 16, 2026.

Notably the amendments to the framework and regulation were notified earlier on December 3, 2025. The provisions mentioned in the circular will be enforced from June 1, 2026.

Sebi said in the circular: “Sebi (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025 were notified on December 3, 2025, amending the Sebi (Foreign Portfolio Investors) Regulations, 2019, inter alia, to simplify on-boarding and ongoing compliances for SWAGAT-FIs.”

The framework seeks to ease compliance processes for trusted foreign investors. Trusted foreign investors refer to global investors who are considered "low-risk" on account of their transparent ownership, stringent home-country regulation, and overall investment philosophy. These investors include government entities like sovereign wealth funds (SWFs), international agencies, and entities with 75 per cent government shareholding. The category also includes select mutual fund units, regulated pension funds, and regulated insurance companies.

As a part of the revised framework, these investors are set to benefit from a unified registration process. The new framework allows these entities to operate as both foreign portfolio investors (FPI) and foreign venture capital investors (FVCI) through a single unified application. Prior to the introduction of the new framework, investors had to file separate applications to operate as FPIs and FVCIs.

Other significant changes introduced by the market regulator include the extension of registration and know your customer (KYC) timelines for trusted foreign investors from 5-10 years. Additionally, the periodic KYC reviews by custodians will also happen on a 10-year basis, this reducing the paperwork involved in the process.

“FPIs who wish to continue with their registration for the subsequent block of three years (10 years in case of SWAGAT-FI), should pay the fees to their DDPs and inform change in information, if any, as submitted earlier,” Sebi said.

Sebi has also mandated the depositories to enable a unified investment for trusted foreign investors, enabling them to maintain securities across both the FPI and FVCI routes. Sebi has revised contribution-related restrictions, such as caps on resident Indian contributions through the liberalised remittance scheme (LRS); these will be eased for SWAGAT-FI entities.

How Can The SWAGAT-FI Framework Impact D-Street

The introduction of the framework is likely to bolster investor sentiment, as the framework seeks to streamline the entry of capital. Typically D-Street has seen significant volatility following the exit of foreign investors during geopolitical uncertainty. Increased participation from trusted foreign investors can provide a "buffer" in periods of global sell-offs, and reduce volatility on D-Street.

The easing of the cap on contributions from non-resident Indians (NRIs) and overseas citizens of India (OCIs) can potentially ease the flow of "diaspora capital" to India which in turn can increase liquidity on D-Street.

In a period framed by global uncertainty on account of US President Donald Trump’s trade tariffs, geopolitical conflicts and a competition for capital between global markets, the new framework is expected to provide a psychological boost by aiding the return of foreign investors.