The Single Window Automatic and Generalised Access for Trusted Foreign Investors (SWAGAT-FI) framework came into force on June 1, as part of efforts to attract more stable foreign investment.
Overseas ownership of local equities is at a 17-year low and the rupee remains among Asia’s weaker-performing currencies this year.
The new route allows for simpler registration and compliance for a select category of foreign portfolio investors (FPIs) considered low risk, including sovereign wealth funds, pension funds, insurance companies and regulated public retail funds.
These investors account for 70% of total foreign investment in India.
Among other rules, investors will now get a 10-year registration period instead of the earlier 3-year cycle applicable to FPIs, sharply reducing renewal-related paperwork and compliance costs for large long-term investors.
The early registrations include investment structures linked to some of the world’s largest asset managers, including BlackRock, Vanguard, State Street and Franklin Templeton, data from the National Securities Depository shows.
Korea Investment Corporation — South Korea’s sovereign investment pool — Malaysian pension funds and other government-related investors are also using this window.
The registration data does not show how much capital has entered India, but since the framework became operational foreign investors have added a net 702 billion rupees ($7.34 billion) to Indian equity markets till August-end, before sentiment weakened again in September with foreign investors pulling out 278.1 billion rupees so far.
Reuters reported earlier this week that a separate route for funds that seek to invest only in government bonds has received interest from South Korea’s state-run pension fund, the world’s third-largest. Dutch hedge fund Allianz Europe B.V. has also registered under this route, the data showed.
($1 = 95.5900 Indian rupees)