The Securities and Exchange Board of India (Sebi) has introduced a framework that allows foreign portfolio investors (FPIs) to net settle funds in the cash market, a significant move aimed at enhancing market efficiency and reducing transaction costs. Currently, FPIs must settle trades on a gross basis, which has been criticized for increasing liquidity requirements and operational inefficiencies. Under the new framework, FPIs can offset buy and sell positions in outright transactions—those involving either only purchases or only sales within a settlement cycle. This change is expected to lower funding needs and improve capital efficiency, making Indian markets more appealing to global investors. However, non-outright transactions, which involve both buy and sell positions in the same security, will continue to be settled on a gross basis. The implementation of this framework is scheduled for December 31, 2026, and Sebi has directed custodians to update their systems accordingly. This initiative is part of Sebi's broader strategy to modernize market infrastructure while safeguarding investor interests.