FPI Regime Version 2.0 - Regulatory And Tax Update

This Newsletter contains an analysis of the following -

• Restriction on issuance of P-notes against naked derivative exposure prescribed by SEBI;
• Key relaxations to FPI registration and compliance norms proposed by SEBI; and
• Clarity provided in tax provisions impacting FPIs, their investors and P-note holders.

Indian regulatory and tax authorities have rolled out certain key changes to reform and upgrade the country's regulatory and tax regime for entities registered, or seeking registration, with the Securities Exchange Board of India (SEBI) as Foreign Portfolio Investors (FPIs) under the provisions of SEBI (Foreign Portfolio Investors) Regulations 2014 (FPI Regulations). Such changes can broadly be classified as: (i) narrowing the regulatory arbitrage between the regime for investments in P-notes issued by FPIs and that of making direct FPI investments in Indian securities; (ii) proposing regulatory reforms aimed at easing the norms of registration and