The Securities and Exchange Board of India (SEBI) has notified changes to the Foreign Portfolio Investors (FPI) regulations, replacing the US dollar-denominated payment mechanism with a rupee-denominated fee structure for foreign investors and foreign venture capital investors (FVCIs). The modifications will take effect after six months to give foreign investors and intermediaries sufficient time to adjust.
Revised fee structure
According to the notification dated 3 July, in regulation 43B(2), the words and symbols 'US $1000' shall be substituted with '₹90,000 in eligible foreign exchange equivalent'. Additionally, the registration price for FVCIs and Category-I FPIs has been changed from USD 2,500 to ₹2.3 lakh. The late fee and continuance cost have also been updated.
In accordance with the revised regulations, designated depository participants (DDPs) must send SEBI the fees they receive from FPIs and FVCIs within five business days of registration. Furthermore, the regulator has streamlined the registration procedure by adding the date of incorporation or birth to the standard application form for FPI registration.
Impact and rationale
The modification is intended to make Permanent Account Number (PAN) applications easier, in line with the announcement made by the Central Board of Direct Taxes (CBDT) in March. SEBI received USD 12.98 million from FPIs and FVCIs for registration, continuation and other fees, including GST, during the fiscal year 2025–2026.
According to the regulator, operational issues with the current dollar-based system such as manual accounting and invoicing, a lack of real-time accounting visibility and delays in financial reporting, are addressed by the switch to a fee structure priced in rupees. Apart from that, the regulator revised the fee payment system for custodians, substituting a monthly payment of ₹85,000 for the yearly payment of ₹10 lakh.
