SWAGAT-FI has been defined under new clause (r) of Regulation 2(1) of the FPI Regulations, with the following set to receive automatic SWAGAT-FI status: (i) Government and Government-related investors as provided under Regulation 5(a)(i), and (ii) public retail funds as defined in the Explanation clause under Regulation 22(4). This now forms the basis for all downstream exemptions. The amendment also broadens allowable constituents of an FPI, allowing a mutual fund which is registered by SEBI to form part of the applicant entity, but under the circumstances specified by SEBI. Also, the terminologies and financial threshold requirements relating to applicant suitability under the third proviso to Regulation 4(c) have been amended to align the framework with that of the IFSCA Fund Management Regulations. The words “Sponsor or Manager” are replaced with “fund management entity or its associate,” with the latter having the same meaning as defined under the IFSCA Fund Management Regulations. The term “Retail Scheme” is incorporated along with Alternative Investment Funds (AIFs) under permissible resident Indian (other than individuals), and the contribution floor for such fund management entity or its associates is increased to 10% of corpus for AIFs, and capped at 10% of AUM for retail schemes, instead of dollar limits; thereby ensuring consistency in the framework between the domestic and the IFSC regime. Significantly, SWAGAT-FIs are expressly exempted from the aggregate contribution limits for NRIs, OCIs, and resident Indians under Regulation 4(c)(ii), reflecting SEBI’s intent to facilitate broader participation from these trusted entities. Registration fees of SWAGAT-FIs will now be paid for every block of ten years as provided under Regulation 7(6) and Part A of the Second Schedule.

Simultaneously, the same definition of SWAGAT-FI has been provided under new clause (ka) under Regulation 2(1) of the FVCI Regulations. A corresponding pattern of exemptions as stated above is likewise implemented. SWAGAT-FIs are excluded from the standard application procedure under Regulation 3(2). FVCIs’ renewal charges referred to under Regulation 9(2) and the Second Schedule shall henceforth assume a block arrangement of ten years identical to the FPI framework, which starts from the eleventh year of registration. Most importantly, investment concentration limits of 66.67% and 33.33% under Regulation 11(c) (i) and (ii) will not be applicable to the SWAGAT-FIs, and this will give them more freedom in investing in the Indian structure of venture capital.

The FPI and FVCI Amendment Regulations will come into force w.e.f. May 30, 2026. However, the inclusion of mutual funds registered with SEBI and the alignment of terminologies and thresholds with the IFSCA Fund Management Regulations, under Regulation 4(c) of the FPI Regulations, have an immediate effect. 

Structurally, both notifications suggest a cohesive strategy by SEBI, which is formalising a trusted-capital corridor for governments, sovereign pools, multilaterals, and large regulated retail vehicles. By aligning definitions, exempting these investors from detailed eligibility conditions, and adopting a long-cycle fee and registration model, SEBI creates a risk-based system that separates trusted foreign capital from higher-risk private investments.

The implications are instantaneous for the market players. Present FPIs and FVCIs falling within the SWAGAT-FI categories should review their eligibility and consider transitioning to the new regime to benefit from reduced compliance friction, a longer registration cycle and expanded investment bandwidth. The managers dealing with sovereign or public-retail capital will be required to update onboarding documentation, internal checklists and suitability assessment in order to identify the updated thresholds and more relaxed linkage tests. Fund sponsors and fund managers working both on domestic and IFSC platforms will need to re-evaluate governance decisions, including structuring decisions as they relate to this alignment with the IFSC fund-management framework.

Together, these amendments constitute a strategic rewrite of the Indian foreign-investment rule book: centralising SWAGAT-FI as one interoperable regulatory category and providing a less complex, predictable and compliance-light way of entry into the country with trusted international capital.