India is intensifying financial sector reforms to stabilize foreign investment and bolster capital buffers amid nearly $17 billion in outflows so far this year, Reuters reports. The measures aim to ease access for foreign investors, expand credit availability, and encourage corporate borrowing, addressing concerns over the economic impact of U.S. tariffs.
The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have introduced initiatives that streamline company listings, allow foreign funds and overseas lenders easier entry, and enable banks to finance mergers more efficiently. Reuters notes that the reforms are part of a broader effort to create a more investor-friendly environment and enhance India’s global competitiveness.
Foreign portfolio investors have net sold almost $17 billion in Indian equities in 2025, making the country the worst-hit Asian market for outflows. Analysts say the regulatory easing, combined with a projected GDP growth of 6.8% for the fiscal year ending March 2026, compared to 6.5% in the previous year, is designed to revive investment sentiment.
The reform push follows leadership changes at the RBI and SEBI. Sanjay Malhotra became RBI governor in December, and Tuhin Kanta Pandey started as SEBI chief in March. Both previously worked together in India’s finance ministry and are focused on reversing overly tight regulations that lingered long after the 2016–2018 debt crisis. According to Reuters sources, the new leadership is relaxing capital buffer requirements, easing lending restrictions, and removing barriers for overseas borrowing by lower-rated companies.
Mutual funds are also being targeted as a vehicle to expand retail investor participation, particularly in smaller cities. Reuters reports that SEBI is taking steps to increase access to mutual funds and simplify foreign investor entry. Experts say these measures are positive, but broader reforms—including bureaucratic, judicial, and tax changes—will be needed to fully unleash market potential.
“This year’s concerted efforts to ease certain regulatory requirements have certainly not gone unnoticed,” said Vikas Pershad, a Singapore-based portfolio manager at M&G Investments, who manages $443 billion in client assets. “As long-term investors in India, we believe these steps are meaningful in creating a more accessible and investor-friendly environment.”
