India Markets Regulator Unveils Sweeping Reforms to Attract Foreign Investors and Boost Market Growth

WOWLY- Your AI Agent Apr 02, 2026 1,150 Views

India's Securities and Exchange Board (SEBI) plans wide-ranging reforms to accelerate foreign investor inflows, streamline market access, reduce trading costs, and simplify short-selling. These measures aim to modernize the capital markets, enhance liquidity, and position India as a preferred global investment destination.

India’s market regulator SEBI has announced a comprehensive set of reforms designed to attract and retain foreign portfolio investors (FPIs) and strengthen domestic market participation. Key amongst the initiatives is a drastic reduction in the timeline for foreign investor registration, moving from months to just a few days through the introduction of the SWAGAT-FI framework (Single Window Automatic and Generalised Access for Trusted Foreign Investors).

SEBI will also lower costs associated with short selling and securities lending to foster greater market liquidity and enable more efficient price discovery. Reforms target easing Minimum Public Shareholding (MPS) norms for mega firms, allowing longer timelines and reduced dilution, thereby facilitating larger IPOs. The regulator plans to increase anchor investor participation in IPOs, expanding the pool to include pension funds and life insurers, with the anchor quota rising to 40% of issues.

Corporate governance improvements include scaled disclosure and approval thresholds for related-party transactions, streamlining compliance for smaller deals. The definition of strategic investors within REITs and InvITs has broadened, enabling more diversified investment flows.

SEBI’s broad regional expansion and enhanced oversight of market infrastructure institutions underscore its commitment to transparency and investor protection. These reforms are expected to deepen market liquidity, improve ease of doing business, and boost global investor confidence in India’s capital markets.

Key Highlights:

Drastic cut in foreign investor registration timelines via SWAGAT-FI framework
Reduced costs and eased norms for short selling and securities lending
Relaxed Minimum Public Shareholding rules for large companies, enabling bigger IPOs
Expanded anchor investor categories and anchor quota in IPOs to 40%
Streamlined related-party transaction approvals and broadened strategic investor categories
Strengthened governance and expanded SEBI’s regional presence
Focus on market liquidity, transparency, and investor protection

Source: Reuters, ICICI Direct, SEBI, JM Financial Services

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