Regulator considers easing disclosure norms for offshore funds to encourage long-term foreign capital inflows
Jaipur : The Securities and Exchange Board of India (SEBI) is reportedly considering relaxing certain investor disclosure requirements for offshore funds to encourage foreign portfolio investment (FPI) into Indian markets. According to media reports, the move follows industry representations and legal challenges arising from the stricter disclosure norms introduced during the regulator's scrutiny of investments linked to the Adani Group.
According to sources familiar with the matter, SEBI aims to make it easier for global long-term investors to invest in India. The proposal comes at a time when foreign portfolio investors (FPIs) have withdrawn a record US$26.88 billion from Indian equities so far in 2026.
SEBI Reviewing Three Key Proposals
According to the report, the market regulator is evaluating three major proposals:
- Granting newly established offshore funds a six-month to one-year exemption from investor disclosure requirements after they begin investing in India.
- Raising the investment threshold that triggers mandatory disclosure of investor details.
- Expanding the list of eligible countries and regulated entities that qualify for disclosure exemptions.
No final decision has been taken, and the proposals remain under regulatory review.
Focus on Attracting Long-Term Foreign Capital
One source cited in the report said that the regulator is making a "concentrated effort to ease pain points and attract long-term foreign capital."
Market participants believe that if implemented, the proposed changes could make it easier for global thematic and long-term investment funds to increase their exposure to Indian equities.
Background: Stricter Rules Introduced After Adani Investigation
SEBI had introduced stricter disclosure requirements following concerns over ownership structures identified during investigations related to the Adani Group. Under the current framework, offshore funds classified as "high risk"—primarily those with more than 50% exposure to Indian equities—are required to disclose detailed information about their ultimate investors.
Industry participants have argued that these requirements have increased compliance costs and created operational challenges for genuine foreign investment funds.
No Official Confirmation Yet
According to the report, SEBI has not responded to media queries regarding the proposed changes. As a result, there is no official confirmation on whether the proposals will be implemented or when they may come into effect.
Aurelius Business View
If approved, the proposed relaxation could improve India's appeal as an investment destination by reducing compliance burdens for offshore funds while maintaining regulatory oversight. At a time when foreign capital outflows remain elevated, a balanced regulatory approach could help restore investor confidence and attract long-term institutional investment. However, any changes will need to preserve transparency and safeguard market integrity.
Disclaimer: This article is based on media reports and information from unnamed sources. SEBI has not officially confirmed the proposed changes. Investors should await formal regulatory announcements before making investment decisions.
