SEBI Caps International SIPs: Indian Investors Face Limited Global Options

THE PIP (TL;DR)

Your options for new international mutual fund investments are shrinking, impacting global diversification. Several major fund houses, including Edelweiss Mutual Fund and PGIM India Mutual Fund, have suspended fresh Systematic Investment Plans (SIPs) in international schemes. This halt stems from a market-wide overseas investment cap set by the Securities and Exchange Board of India (SEBI) in 2022, which the industry has largely exhausted. While existing SIPs are unaffected, new investors must explore alternatives like the Liberalised Remittance Scheme (LRS) or GIFT City funds for global exposure.

Indian investors are currently finding fewer avenues to initiate fresh Systematic Investment Plans (SIPs) in international mutual funds. Major players like Edelweiss Mutual Fund, PGIM India Mutual Fund, and Franklin Templeton Mutual Fund have paused new investments into their global schemes. This situation isn’t tied to fund performance but rather to a regulatory limit.

The primary reason for these suspensions is an industry-wide overseas investment cap mandated by the Securities and Exchange Board of India (SEBI) back in 2022. This cap limits the total amount Indian mutual funds can invest abroad. The industry largely exhausted its available headroom in February 2022, leading SEBI to direct fund houses to cease fresh investments that would exceed this prescribed limit.

This means that while your existing international SIPs will continue unaffected, new money looking for global diversification through traditional mutual funds faces significant hurdles. The surge in investor demand for overseas equity funds, particularly those tracking markets like the US and Europe, has pushed many asset management companies to their regulatory limits. Only a few schemes, such as the Baroda BNP Paribas Aqua Fund of Fund, are currently accepting fresh investments.

However, this doesn’t mean global diversification is off the table entirely. You can explore alternatives like the Liberalised Remittance Scheme (LRS), which allows direct investments in overseas securities. The Union Budget 2025 also eased the Tax Collected at Source (TCS) threshold on LRS remittances from ₹7 lakh to ₹10 lakh, making smaller overseas investments less burdensome upfront. Additionally, GIFT City-based retail funds and global Exchange Traded Funds (ETFs) listed on Indian exchanges offer other avenues to access international markets.

ONE THING TO CONSIDER TODAY

Take a moment to understand the different routes available for international diversification beyond traditional mutual funds, ensuring your portfolio strategy remains robust even with regulatory shifts.