FPI & OPI Compliance

Two distinct regimes govern foreign portfolio-style investment into and via India:

SEBI (Foreign Portfolio Investors) Regulations, 2019 replaced the earlier three-tier FII/QFI/FPI structure with two categories: Category I (government and government-related investors, and appropriately regulated broad-based funds/entities, which alone are eligible to issue Offshore Derivative Instruments) and Category II (all other eligible applicants, not permitted to issue or invest in Offshore Derivative Instruments). Registration is granted by a Designated Depository Participant acting on SEBI's behalf, and permits investment in listed Indian equity, government and corporate debt, and units of mutual funds/AIFs, subject to sectoral and aggregate investment ceilings.

Outbound portfolio investment by residents is separately governed by the Foreign Exchange Management (Overseas Investment) Rules, 2022 (effective 22 August 2022), which introduced Overseas Portfolio Investment (OPI) as a defined category: investment in the listed equity of a foreign entity where the resident holds less than 10% of paid-up equity capital and has no control, or investment in units of unlisted foreign investment funds. Holding 10% or more of a listed foreign entity's paid-up equity, or holding any stake together with control, is instead classified as Overseas Direct Investment (ODI) and attracts the more onerous ODI compliance regime (Form OI filing, Annual Performance Report). Correctly distinguishing OPI from ODI at the outset determines which reporting and approval track applies.

FPI and OPI compliance is the regulatory life of foreign portfolio investors and overseas investors in the Indian market. Foreign Portfolio Investors are registered with SEBI under the SEBI (Foreign Portfolio Investors) Regulations 2019, and their investments in Indian listed securities are governed by the FPI framework — the entity-level registration, the investment limits, the beneficial ownership and the reporting. OPI refers to the overseas portfolio investor category in the same regulatory family (VERIFY: the current SEBI framework for FPI and OPI registration and reporting). The compliance runs with the investment: the registration, the KYC, the reporting and the tax.

The FPI regime exists to give foreign investors a single regulated channel into Indian securities, and the obligations run on both sides of the investment: the investor's registration and its ongoing compliance — including the reporting of the total investment against the sectoral and aggregate limits — and the custodian's and the Indian company's side of the record. On the tax side, FPI capital gains follow the capital gains provisions of the Income Tax Act 1961 with the treaty positions applicable.

The cost of FPI non-compliance is the SEBI enforcement framework and the record defects: an unregistered investment, a limit crossed without the reporting, a beneficial ownership change unreported — each is a compliance event that surfaces at the investor's next transaction or the regulator's inspection.

This service is for FPIs, foreign investors and the Indian companies they invest in. We advise on FPI and OPI registration under the SEBI Regulations 2019, manage the KYC and the reporting, monitor the investment limits, coordinate the tax position and the treaty rates, and keep the compliance current with the framework.