Harmonisation Or Fragmentation? Analysing The Regulatory Interface Between SEBI And FEMA In India’s Foreign Investment Regime (2025-2026)
- IJLLR Journal
- May 20
- 1 min read
Aneesha Biswas, B.A.LL.B. (H), Amity Law School, Amity University, Kolkata.
Katriona Sen, B.A.LL.B. (H), Amity Law School, Amity University, Kolkata.
ABSTRACT
India’s foreign investment regime is governed through a complex regulatory framework primarily involving the Securities and Exchange Board of India and the framework established under the Foreign Exchange Management Act, 1999. While FEMA regulates the permissibility and legality of cross- border capital transactions, SEBI governs the operational and market-related aspects of foreign investment, particularly Foreign Portfolio Investment (FPI). The coexistence of these parallel frameworks has resulted in a regulatory structure characterised by overlapping jurisdiction, dual compliance obligations, and interpretational inconsistencies.
This paper critically examines whether the interaction between SEBI and FEMA reflects regulatory harmonisation or structural fragmentation within India’s foreign investment regime. It analyses the legal architecture governing Foreign Direct Investment (FDI) and FPI, the role of subordinate legislation and executive policy instruments, and the practical implications of overlapping regulatory mandates. The paper further evaluates recent reforms undertaken during 2025–2026, including changes relating to beneficial ownership, FPI compliance norms, and strategic investment restrictions involving land-bordering countries. The study argues that although recent reforms indicate a movement towards liberalisation and procedural simplification, they continue to operate within a fragmented multi-regulatory framework lacking institutional coherence and harmonised definitional standards. The paper concludes that meaningful regulatory convergence would require systemic reforms involving enhanced inter- regulatory coordination, greater legal certainty, and the development of a more integrated foreign investment governance framework.
Keywords: Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), FEMA, SEBI Regulatory Fragmentation.
