India Grants FPI Rule Exemption to Saudi Sovereign Fund
In a landmark policy adjustment aimed at deepening strategic investment ties, India is set to exempt Saudi Arabia’s Public Investment Fund (PIF) from the conventional foreign portfolio investment (FPI) rules. This exemption will allow PIF’s multiple subsidiaries to independently invest in Indian companies without being subjected to the 10% aggregate cap typically imposed on sovereign funds under FPI guidelines.
The proposed exemption comes on the heels of Prime Minister Narendra Modi’s high-profile visit to Saudi Arabia in April 2025, during which both governments expressed a renewed commitment to expanding bilateral economic collaboration. “India is discussing an exemption for the sovereign wealth fund of Saudi Arabia that would allow it to exceed a 10 percent equity holding limit in Indian listed companies,” a source familiar with the development stated.
The PIF, with over $925 billion in assets under management, already has significant stakes in India through its investments of $1.5 billion in Jio Platforms and $1.3 billion in Reliance Retail. With this exemption, the PIF could scale up its exposure to Indian equities across various sectors, including energy, digital infrastructure, and logistics.
Saudi Arabia has set an ambitious goal to invest nearly $100 billion in India. A joint task force created in 2024 is actively identifying viable sectors and easing entry pathways to facilitate this commitment. “The exemption is seen as a move to encourage long-term capital flows from the Gulf kingdom into one of the fastest-growing large economies,” noted an Indian government official.
Alongside the FPI exemption, New Delhi and Riyadh are also working towards signing a bilateral investment treaty (BIT). The BIT aims to provide a stable legal and regulatory framework for Saudi investments in India. Moreover, tax relief discussions are underway that could reduce withholding tax burdens for PIF and similar sovereign wealth funds.
India’s strategic outreach to Saudi Arabia aligns with its broader goal of attracting stable, long-term foreign investment and reducing reliance on volatile capital inflows. By granting special status to the PIF, India not only strengthens diplomatic relations but also positions itself as a top destination for large-scale sovereign wealth investments from the Gulf region.
