India Ready to Ease Rules After $17-Billion Foreign Outflow Hit: Report

The sell-off has made India the worst-hit Asian market in terms of foreign portfolio withdrawals.

The Wire Staff

The sell-off has made India the worst-hit Asian market in terms of foreign portfolio withdrawals.

india ready to ease rules after 17 billion foreign outflow hit report

A file image of the SEBI building. Photo: PTI/File.

New Delhi: India is poised to allow an easing of regulations in its $260 billion financial sector over the next six-to-12 months, Reuters has reported, according to six regulatory and market sources.

India has faced a foreign outflow of nearly $17 billion this year and is eager to reform its financial sector in order to lift investment. The sell-off has made India the worst-hit Asian market in terms of foreign portfolio withdrawals. The numbers are drastic as inflows were $124 million in 2024 and $20 billion in 2023. At present, India is battling a 50% tariff imposition by the US – something that has affected exports in various sectors and has also impacted the markets.

The Reserve Bank of India's monthly report last week had observed that net foreign direct investment (FDI) had turned negative in August due to moderation in inflows and increase in repatriation.

The Reuters report noted that the RBI and the market regulator, Securities and Exchange Board of India, has taken several measures to anchor foreign participation and boost credit, like allowing banks to effect mergers easier and so on.

Among other areas of regulatory easing are "bolstering capital market participation by mom-and-pop investors in smaller towns and further easing banking regulations," said the Reuters sources.

A Sebi spokesperson told the agency that it has introduced 11 "major reforms" for foreign investors to improve their access to India.

Reuters had reported in September that RBI and Sebi were finalising these changes. “To facilitate the ease of investments by foreign investors in India, we are engaging with various stakeholders to streamline the know-your-customer norms across the regulators,” Sebi chairman Tuhin Kanta Pandey had been quoted as having said.

At that time, Reuters had reported that Indian regulatory officials had met over 200 global asset managers across Europe, Asia and the US in the last five months to seek feedback on ways to make Indian markets more accessible.

A day ago, SEBI proposed a framework to reduce the compliance burden of companies with large debts, by raising the threshold for identifying High Value Debt Listed Entities (HVDLEs) to Rs 5,000 crore from the current Rs 1,000 crore.

This article went live on October twenty-eighth, two thousand twenty five, at twenty-one minutes past three in the afternoon.

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