India’s Investment Future: SEBI ASPIRE 2025 Insights on FPI & Mutual Funds

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 India’s Investment Landscape: Insights from SEBI’s ASPIRE 2025 Event

The Securities and Exchange Board of India (SEBI) recently shared critical insights at the ASPIRE 2025 event, organized by the Association of Registered Investment Advisors (ARIA) in Mumbai. Delivered by WTM Ananth Narayan, the speech highlighted the evolving investment landscape, the role of domestic and foreign investors, and the regulatory challenges ahead.

Explore SEBI’s latest insights from ASPIRE 2025 on FPI trends, mutual fund growth, and regulatory measures shaping India’s investment landscape. Stay updated on investor protection, governance, and market trends.
Source of Image - AI

Foreign Portfolio Investment (FPI) Trends

Despite short-term fluctuations, Foreign Portfolio Investments (FPIs) in India remain strong. Over the last five fiscal years (since April 2020), India received total FPI inflows of $54 billion, with $21 billion in equity and $33 billion in debt. Comparatively, the previous five-year period (FY16-FY20) saw just $19 billion in inflows.

Notably, FPIs currently hold assets worth over INR 62 lakh crores (~$700 billion) in equity and INR 5.9 lakh crores (~$68 billion) in debt. The inclusion of Indian bonds in global debt indices has further strengthened India’s foreign investment appeal. Over the past five years, the MSCI India Index has delivered an 11% CAGR in USD terms, outperforming other emerging and developed markets.

The Rise of Domestic Mutual Funds

A major shift in India's investment landscape is the domestic mutual fund (MF) investment surge. Over the past five years, equity-oriented MFs have attracted INR 16 lakh crores (~$200 billion)—ten times the net inflows from FPIs. In FY25 alone (April 2024 – February 2025), mutual funds have infused INR 5.7 lakh crores into the market.

This has altered market dynamics significantly:

  • Mutual Fund holdings in NSE's market capitalization have risen from 3.9% in 2014 to 10.0% in 2024.
  • Meanwhile, FPI share has declined from 22% to 17.4%.
  • The number of unique investors in the SEBI ecosystem has surged from 5 crores in March 2020 to over 13 crores in 2025.

Governance and Investor Protection

SEBI emphasizes the importance of corporate governance, investor awareness, and trust as domestic investment rises. Companies must ensure transparent financial practices, while investors should adopt responsible financial planning. Notably:    

  • During FY24, only INR 2 lakh crores were raised through new equity issuances against INR 5 lakh crores of inflows from MFs and FPIs.
  • This gap highlights the need for an increased supply of fresh investment opportunities to sustain market growth.

Regulatory Challenges & Investor Safety

SEBI continues to tackle fraudulent investment activities and has taken strict action against unregistered investment advisors. Since October 2024, SEBI has worked with social media platforms to remove over 70,000 misleading accounts and posts.

A notable upcoming initiative is the UPI “Payright” handle, which will allow investors to verify SEBI-registered entities, enhancing investor security. SEBI also encourages self-regulation within the industry and proposes ARIO function as a quasi-SRO (Self-Regulatory Organization), similar to AMFI (Association of Mutual Funds in India).

Looking Ahead: Collaboration for Sustainable Growth

SEBI stresses that sustained capital formation requires collaboration between regulators, investment advisors, mutual fund distributors, and policymakers. Key focus areas include:

  • Enhanced investor education and awareness initiatives.
  • Minimizing regulatory errors that either hinder business (Type II errors) or allow fraudulent activities (Type I errors).
  • Leveraging the Accredited Investor model to create a risk-aware investment ecosystem.

Conclusion

India’s investment landscape is evolving, with a stronger reliance on domestic investors alongside continued foreign participation. With robust market fundamentals and proactive regulatory measures, India is well-positioned for sustainable financial growth.


Source of Information:

This blog is based on insights from the SEBI Report presented at ASPIRE 2025, Mumbai, March 21, 2025.


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