Introduction of  Foreign Portfolio Investors :

In order to harmonize the various available routes for foreign portfolio investment in India, the Securities and Exchange Board of India (“SEBI”) introduced a new class of foreign investors in India known as the Foreign Portfolio Investors (“FPIs”). This class has been formed by merging the existing classes of investors through which portfolio investments were previously made in India namely, the Foreign Institutional Investors (“FIIs”), Qualified Foreign Investors (“QFIs”) and sub-accounts of the FIIs. Previously portfolio investment was governed under different laws i.e. the SEBI (Foreign Institutional Investors) Regulations, 1995 (“FII Regulations”) for FIIs and their sub-accounts and SEBI circulars dated August 09, 2011 and January 13, 2012 governing QFIs, which are now repealed under the SEBI (Foreign Portfolio Investors) Regulations, 2014 (“FPI Regulations”) that govern FPIs and are effective from 7 January 2014.

The FPI Regulations are a step in the right direction towards rationalizing and simplifying the portfolio investments in India for foreign investors, with a view to encourage foreign investment in the Indian securities markets.