The Securities and Exchange Board of India (Sebi) has approved a significant change in the settlement process for foreign portfolio investors (FPIs), allowing them to settle trades on a net basis rather than the current gross settlement system. This change, aimed at reducing funding costs and aligning with global practices, was approved during Sebi's March board meeting. Under the new system, if an FPI buys and sells ₹100 crore (approximately $12 million USD) worth of stocks, they will only need to fund the net position, streamlining the transaction process. However, custodians, who manage trade execution and settlement, have raised concerns about the operational complexities this shift introduces, particularly given the current geopolitical tensions that may lead FPIs to be cautious. They highlight potential difficulties in accommodating late trade changes, which are common due to time zone differences. Additionally, custodians fear that the new tax implications and netting process could complicate client communications. Sebi has limited netting to outright transactions and has provided a long implementation timeline, with the framework set to roll out by December 31, 2026. Despite these challenges, proponents argue that the move will enhance India's market appeal to global investors.