Global capital does not walk into Indian securities; it enters through a registered door. That door is the Foreign Portfolio Investor framework — SEBI’s registration, categorisation and custody regime for offshore investors — and for institutional money the standard configuration remains a regulated fund vehicle in a treaty jurisdiction holding an FPI Category I registration.
What the framework actually does
The FPI regime replaces a maze with a corridor. Registration establishes who the investor is (with SEBI-registered custodians as gatekeepers); categorisation establishes how it is regulated at home — Category I, the highest tier, covers appropriately regulated entities including funds from FATF-member jurisdictions; and the custody rules ensure Indian assets sit with a local custodian, segregated and reconciled, rather than on anyone’s promise. For the underlying investor, the practical meaning is that FEMA, RBI and SEBI compliance is handled once, at the vehicle level, instead of per person per trade.
Why Mauritius persists
Mauritius has been a principal gateway for India-bound portfolio capital for three decades, and the reasons outlast the tax-treaty arithmetic that once dominated the conversation. The FSC’s global business regime provides substance and supervision that SEBI’s Category I tier recognises; the professional infrastructure — administrators, auditors, counsel who process India-facing structures daily — is dense; and the VCC Act 2022 added the modern fund architecture (segregated sub-funds under one umbrella) that global allocators expect. The corridor is familiar to every serious service provider on both ends, which is precisely what an allocator wants from plumbing: no surprises.
What it means in Novem’s structure
The fund’s configuration is the standard institutional pattern: a Mauritius VCC sub-fund (FSC Global Business Licence at the umbrella), investing into India through the SEBI FPI Category I route, with custody at a SEBI-registered custodian in India and independent administration in Mauritius. Investors subscribe in USD to a regulated offshore vehicle; the vehicle — not each investor — carries the Indian regulatory relationship. One consequence is worth restating plainly: under FEMA, the structure cannot accept residents of India; globally mobile Indians participate through the NRI/OCI route.
Frameworks are not returns. But they decide whether returns can be accessed, held, valued and repatriated in an orderly way — and on that test, the Mauritius–FPI corridor remains the institutional standard for a reason.