FPI registrations lowest in a decade, although foreign inflows at highs

livemint.com:

NEW DELHI/MUMBAI : Registrations by foreign portfolio investors in India this year were the fewest in at least 10 years, although foreign investments have continued to rush in. Market experts pinned the steep decline in registrations on global economic headwinds, while pointing out that FPIs already in India have delivered stellar returns in recent years.

Only 167 offshore funds set up shop in India this year, down from 604 in 2022, show data compiled from the Securities and Exchange Board of India. The last time FPI registrations were at this year’s level was in 2019, at 169.

India, however, has been receiving robust foreign inflows, outperforming other emerging markets. In 2023, India received net FPI inflows amounting to ₹2.3 lakh crore, of which ₹1.6 lakh crore was from equities—the best since 2020 when foreign funds pumped ₹1.7 lakh crore into India.

Combining equity and debt flows from FPIs, 2023 has been the best year since 2014, when India witnessed offshore investments to the tune of ₹2.5 lakh crore, depository data show. Market experts said that with big global firms such as Blackrock, Fidelity and JP Morgan already managing several funds with India exposure, offshore fund managers may not be inclined to establish more investment vehicles in the country.

“This reduces the need for trustees to set up new investment vehicles that need to register with Sebi for running an India-dedicated fund," said UR Bhat, co-founder, Alphaniti Fintech. “Besides, these funds are receiving greater flows, which to an extent obviates the need for a greater number of India-dedicated funds." Suresh Swamy, partner, Price Waterhouse and Co LLP, said although new fund registration data may seem subdued, newer opportunities are emerging