Indian fund houses are increasingly suspending systematic investment plans into international mutual funds due to restrictive foreign investment caps, highlighting regulatory constraints despite ongoing global market growth.
More Indian fund houses are halting systematic investment plans, or SIPs, into overseas mutual funds, underscoring how tight foreign-investment limits have become rather than any retreat from global markets. According to Value Research, PGIM India Mutual Fund has stopped fresh SIP registrations in three international schemes from August 8, while Edelweiss Mutual Fund will do the same from August 12 across six overseas funds. The affected investors are not being forced out: existing holdings remain invested, and savers can still redeem or switch units if they wish.
The pattern is not new. Value Research says existing SIPs have already been halted in 19 other international schemes run by houses including Invesco, Motilal Oswal, Axis, Kotak, HDFC and Mirae, with about 40 such plans still operating. New registrations are even scarcer, with Baroda BNP Paribas Aqua said to be the only scheme still accepting them. The common constraint is India’s overseas investment ceiling, which has been frozen since early 2022 and has been repeatedly reached as global markets rise.
There are still ways to get foreign exposure without opening a fresh global SIP. Value Research notes that several diversified Indian funds already hold overseas equities, including multi-asset and technology-focused strategies, although those holdings draw on the same regulatory headroom. That means investors may already have some international exposure inside domestic portfolios, even if they have not bought a dedicated foreign fund.
Exchange-traded funds, or ETFs, remain another route, but they come with their own pricing quirks. Value Research said the premium on several global ETFs eased sharply last week after touching elevated levels, with the gap between market price and net asset value narrowing in names such as the Motilal Oswal Nasdaq 100 ETF and Mirae Asset NYSE FANG+ ETF. In plain terms, buyers had recently been paying well above the underlying value of the holdings, but that gap partly closed as fund values caught up.
For investors, the broader message is that overseas investing is constrained, not closed. Dedicated SIPs are harder to start, some existing plans are on ice and ETF prices can swing away from fundamentals, but global exposure is still available through a mix of domestic funds and exchange-traded products. Value Research argues the real question is not whether foreign investing is possible, but which route best fits a portfolio and whether the fund is worth holding for the long term.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
