India’s securities regulator, the Securities and Exchange Board of India (SEBI), has announced a significant regulatory relaxation for Foreign Portfolio Investors (FPIs) investing exclusively in government securities under the Fully Accessible Route. According to a circular released on 10 September 2025, such investors will no longer be required to disclose their investor group details—a move aimed at simplifying compliance and boosting sovereign debt inflows.
These changes come into effect from 8 February 2026, giving market participants and custodians time to adapt their systems. Among the eased requirements are periodic ownership disclosures, frequent KYC renewals, and investor grouping rules under Reg 22 of the FPI Regulations.
The regulation has broader strategic implications. Indian government bonds have gained recent inclusion in global indices like JPMorgan Global Emerging Market Bond Index and FTSE Russell Emerging Markets Government Bond Index, increasing demand from overseas investors. SEBI’s reform seeks to capitalize on that momentum, making India’s sovereign debt instruments more accessible, particularly for conservative long-term foreign investors.
This regulatory overhaul also aligns with earlier compliance relaxations announced in June 2025, which eased KYC norms, extended disclosure timelines, and reduced some reporting obligations for the same class of FPIs
Impact & Outlook
By lowering regulatory thresholds, SEBI aims to deepen India’s government securities market and improve the liquidity of sovereign debt. This could help the central government in financing needs and assist in stabilizing yields amid increasing global volatility.
For FPIs, especially those operating without large institutional backers, the changes reduce operational friction and costs potentially making Indian government bonds a more attractive portfolio allocation.
However, transparency advocates warn that accountability must not be compromised. While the exemptions are limited to FPIs exclusively invested in government securities, regulators and market participants must ensure robust frameworks are in place to prevent misuse and preserve market integrity.
