US, Singapore lead FPI flows into India in CY24
The bulk of net inflows from foreign portfolio investors (FPIs) into India this year has come from the US and Singapore. The two countries have contributed nearly ₹2 lakh crore, in terms of net investment in CY24, with flows from the former totalling ₹1.24 lakh crore and the latter funnelling in ₹73,768 crore. Over 93 per cent of the investment from the US was into equities. For Singapore, on the other hand, 54 per cent of the flows was into debt and hybrid investments.
The figures include net investments in equity, debt and hybrid instruments, and flows from top 10 regions from January to August this year.
Ireland, Japan gain
Inflows from Ireland and Japan have been the most consistent this year, with net investment amounting to ₹50,997 crore and ₹42,024 crore, respectively. In terms of assets under custody (AUC), the two countries ranked fourth and eight, as of August, with assets of ₹4.7 lakh crore and ₹2.36 lakh crore, respectively. The US and Singapore were the top two with AUC of ₹32.57 lakh crore and ₹7.72 lakh crore, respectively.
“Increase of investments from Japan reflects the growing interest of Japanese investors in public market and private investments in India. Ireland is becoming an important jurisdiction for setting up pooling vehicles given its access to the EU market, lower cost as compared to Luxembourg and a well-developed fund ecosystem,” said Rajesh Gandhi, Partner, Deloitte India.
Cayman Islands, a tax haven, and Mauritius, an erstwhile tax haven, saw net flows of ₹18,111 crore and ₹17,143 crore in CY24, placing them seventh and eight, respectively. Mauritius had an AUC of ₹4.41 lakh crore as of August, behind US, Singapore, Luxembourg and Ireland. Notably, the region has invested over ₹6,100 crore into Indian mutual funds, the most among the top 10 countries investing in India. Mauritius’ attractiveness as a preferred destination for equity investments into India has waned somewhat in the past two years after the two countries signed a revised tax agreement in 2016.
Investments from Hong Kong stood at ₹16,776 crore, placing it on the tenth among the list of countries with the most flows into India.
SEBI’s new FPI cell
The Securities and Exchange Board of India (SEBI) has launched a dedicated outreach cell for FPIs as part of the Alternative Investment Fund and Foreign Portfolio Investors department. The cell will focus on direct engagement with FPIs, supporting them in accessing the Indian securities market seamlessly.
Key responsibilities of the FPI outreach cell include providing guidance to prospective FPIs during the pre- application stage, including assistance with documentation and compliance processes, offering support during the onboarding phase, and resolving any operational challenges that may arise during the registration process or thereafter.