India SEBI Eases IPO Rules for Mega-Cap Firms, Boosts Foreign Investor Entry

India's securities market regulator, the Securities and Exchange Board of India (SEBI), has introduced measures to simplify market access for sovereign and overseas retail investors by implementing a single-window clearance system and reducing compliance requirements. To support large companies, SEBI has lowered the minimum share sale requirement in initial public offerings (IPOs) from 5% to 2.5% for firms with market capitalizations exceeding 5 trillion rupees, enabling mega-cap companies to go public with smaller equity dilutions. Additionally, companies will be granted extended timelines to meet public shareholding norms, with some allowed up to ten years to comply. These reforms come amid a challenging environment for Indian markets, which have seen $11.7 billion withdrawn by foreign investors in 2025 due to global economic pressures. SEBI's changes aim to boost India's competitiveness as a destination for foreign investment and facilitate record IPO fundraising expected to reach around $20 billion. Overall, these regulatory adjustments are designed to reduce complexity, simplify compliance, and encourage both foreign investment and domestic market growth.