Market regulator the Securities and Exchange Board of India (Sebi) is preparing a broad reform package to revive foreign investor interest and deepen equity market participation, Reuters reports, citing Sebi Chairman Tuhin Kanta Pandey.

Key measures include:

  • Speeding up foreign portfolio investor registration timelines;
  • Reducing transaction costs in the cash equities segment to improve liquidity;
  • Making it easier to short a stock through a more efficient stock-lending and -borrowing framework;
  • Revising margin requirements in the cash market to strengthen participation and depth;
  • Deferring the shift to same-day (T+0) settlement while continuing with the T+1 cycle for now.

Pre-IPO relaxations: Sebi is also proposing to ease existing pre-IPO lock-in requirements, excluding promoters and large shareholders who could materially impact company decisions, according to Reuters. The Sebi chief sees the current process as “cumbersome” and suggests that a six-month lock-in can be replaced with an automatic enforcement system that can address current delays and difficulties.

Backdrop: The reforms come as foreign investors have pulled about INR 1.42 tn (USD 17 bn) from Indian equities in 2025 amid weaker exports and higher US tariffs. Sebi’s move aims to bring them back in while balancing stability concerns in a derivatives market now over 300x larger than the spot segment.

IN OTHER SEBI NEWS- A Sebi-appointed panel has separately proposed that the regulator’s chairperson and senior officials disclose their assets and liabilities publicly, aligning with practices at global peers such as the US Securities and Exchange Commission (SEC). The recommendation follows conflict-of-interest allegations involving former Sebi chief Madhabi Puri Buch, Reuters reports.

Outlook: Pandey, who took office in March 2025, said Sebi will continue to pursue a “predictable and transparent” regulatory approach to position India as a competitive global investment hub, with further steps on derivatives oversight to follow after recent rule reviews.

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