More FPIs willing to bet on India

Foreign portfolio investors (FPIs) are showing more interest in India going by the year-on-year increase in the number of such investors regulated by the Securities and Exchange Board of India.

From 8,054 in end-March 2014, the number of FPIs has risen to 8,201 as in early March this year, official sources said.

This increase can be attributed to the fact that India is a bright spot in an otherwise gloomy economic scenario in the world, MS Sahoo, former whole-time member of SEBI, told

Investor trust levels in India have gone up in recent months, he said, adding that India was ranked the second-most trusted country in terms of faith reposed on its institutions in a recent annual trust and credibility survey of 27 countries.

Another factor that may have helped is market regulator SEBI’s move last year to expand the category of foreign investors that can access India, said Naresh Makhijani, Partner-Tax, KPMG in India.

“Already many family offices and corporates have started investing in India (through the FPI route),” Makhijani said.

SEBI had, with effect from June 1 last year, put in place a new framework for FPIs — merging all FIIs, sub-accounts and qualified foreign investors to form the FPI.

Earlier, the whole process of FII registration was directly handled by SEBI. Now, the market regulator has allowed designated depository participants to do the paperwork for FPI registration. This new regulatory framework has certainly made a difference, said a senior NSE official.

Moreover, NSE officials have held road shows abroad to spread awareness among global institutional investors on how to get access to India through the new FPI framework, under which the process of registration of new FPIs has been entrusted to designated custodians.

“SEBI has made these custodians its arms and will inspect them. If you are an FPI coming to India, you don’t need to go to SEBI directly for registration. You can look for designated custodians or depository participants to get registered,” Makhijani said.

It is not only the number of FPIs that has gone up in the past 12 months, even the number of foreign venture capital investors (FVCI) has risen. From 192 registered FVCIs in March last year, the number of FVCIs regulated by SEBI as at February-end stood at 203, official data showed.