India steers offshore investors away from P-notes towards direct market access

The implementation of a new foreign investment framework by the Securities and Exchange Board of India (Sebi) will encourage overseas institutional investors to enter the Indian market directly by registering with designated depository participants rather than investing via offshore derivative instruments or participatory notes (P-notes), say observers.

P-note use in India has been declining since its peak in 2007 as a result of increased regulatory scrutiny. In 2007, P-note issuance accounted