Indian Ministry of Finance Restores Mauritius’ Eligibility to Category 1 Foreign Portfolio Investors
By an Order of India’s Ministry of Finance of 13 April 2020, the Central Government specifies Mauritius as an eligible country for the SEBI (Foreign Portfolio Investors) Regulations 2019.
It entitles a Mauritius foreign portfolio investor to apply for a Category 1 FPI Licence and gives implicit recognition to Mauritius entities as being appropriately regulated.
This Order dispels much of the grave concern arising from the February 2020 decision of the Financial Action Task Force (the “FATF”) placing Mauritius on the list of “jurisdictions under increased monitoring.”
Of the most significant concerns was the alarm raised among fund managers and investors interested in the Indian market to the implication of the FATF designation on the eligibility of Mauritius entities to apply for an FPI Licence under the SEBI (Foreign Portfolio Investors) Regulations adopted in September 2019.
An amendment made by SEBI to the 2019 FPI Regulations on 7 April 2020 paved the way for the Ministerial Order
- (https://www.sebi.gov.in/legal/regulations/apr-2020/sebi-foreign-portfolio-investors-amendment-regulations-2020_46504.html ) .
This Order emanating from the Department of Economic Affairs, Ministry of Finance, comes to the rescue of existing Mauritius-based FPI’s a and paves the way for future investment funds established in Mauritius to hold portfolio investment in Indian securities. Mauritius entities which were under the 2014 SEBI FPI regulations licensed as category I or category II can apply to keep their licence category with the accrued privileges and advantages.