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SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

Infrastructure Investment Trusts

SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2025

SEBI vide circular dated April 1, 2025, has amended the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”). Some of the key changes are as follows:

• a new proviso to Regulation 4 (2)(e) (v) of the InvIT Regulations is inserted stating that if by a vacancy in the office of an independent director of the investment manager, the investment manager becomes non-compliant with the requirement of having an independent director, such vacancy must be filled by the manager as follows: (a) if such vacancy arises due to expiry of the term of office of the independent director, then the resulting vacancy must be filled not later than the date such office is vacated; or (b) if such vacancy arises due to any other reason, then the resulting vacancy must be filled at the earliest and not later than 3 (three) months from the date of such vacancy;
• a new sub-regulation is inserted that imposes additional responsibilities on the trustee, including conducting due diligence on investments, maintaining high governance standards, acting impartially in fiduciary capacity, and prioritising unit holders’ interests,. These changes are outlined in Schedule X of the InvIT Regulations. This amendment will come into effect 180 (one hundred and eighty) days from April 1, 2025;
• Infrastructure Investment Trusts (“InvITs”) can invest in additional instruments as part of the 20% investment bucket, subject to certain conditions. These include (a) investing in unlisted equity shares of companies providing project management and incidental services related to infrastructure development; and (b) investing in units of liquid mutual fund schemes with a credit risk value of at least 12 (twelve) and falling under class A-I in the potential risk class matrix. Additionally, InvITs can now invest in interest rate derivatives, including interest rate futures, forward rate agreements, and interest rate swaps. InvITs that raised funds through public issues can now invest in unlisted equity shares of the exclusive project manager or service provider for the infrastructure project, subject to the InvIT holding the entire shareholding in the company, either directly or indirectly. The InvIT Regulations previously allowed InvITs to make investments in companies derived at least 80% of their operating income from the infrastructure sector;
• The amendment to InvIT Regulations now allows sponsors and/or their group entities to undertake inter-se transfers of locked-in units, provided that such units continue to remain locked-in for the balance of period mandated under Regulation 12 of the InvIT Regulations. Additionally, transfers of locked-in units between outgoing and incoming sponsors are also permitted, subject to compliance with the prescribed conditions in Regulation 12 of the InvIT Regulations. Read more

 

SEBI (InvITs) (Second Amendment) Regulations, 2025

SEBI, vide circular dated April 28, 2025, has now permitted InvITs to invest the unutilised funds in unlisted equity shares, units of certain liquid mutual funds schemes (provided that (a) the credit risk value is at least 12, and (b) the scheme falls under class A-I in the potential risk class matrix, as specified by SEBI) and interest rate derivatives as part of the 20% investment bucket, subject to fulfilment of prescribed conditions. Read more

 

SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2025

SEBI, vide circular dated April 22, 2025, has amended the SEBI (Real Estate Investment Trusts) Regulations, 2014 through the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2025.

Some of the key changes are as follows:

• the definition of ‘common infrastructure’ is inserted to include facilities or amenities such as power plants, district or retail heating and cooling systems, water treatment or processing plants, waste treatment or processing plants and any facilities or amenities incidental to real estate business which exclusively supply or cater to, or are exclusively consumed by the Real Estate Investment Trust (“REIT”), its holding companies or special purpose vehicles, irrespective of whether such facilities or amenities are co-located within any project of REIT or not (Regulation 2 (ga) of the principal regulations). However, any excess production or capacity not consumed by the REIT, its Holding Company (“HoldCo(s)”)) or Special Purpose Vehicle (“SPV(s)”), may be sold to a Central or State grid or utility, subject to the prescribed conditions under the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2025;
• if by a vacancy in the office of an independent director of the manager, the manager becomes non-compliant with the requirement of having an independent director, such vacancy must be filled by the manager as follows: (a) if such vacancy arises due to expiry of the term of office of the independent director, then the resulting vacancy must be filled not later than the date such office is vacated; or (b) if such vacancy arises due to any other reason, then the resulting vacancy must be filled at the earliest and not later than 3 (three) months from the date of such vacancy;
• the trustee must: (a) comply with the core principles defining its roles and responsibilities which must encompass transparency, accountability, due diligence and compliance with these regulations; and (b) act impartially in their fiduciary capacity, prioritise protection of the interests of unitholders, ensure effective management oversight over the manager and the REIT and maintain high standards of governance of the manager and the REIT; and
• REITs can invest in additional instruments as part of the 20% investment bucket, subject to certain conditions. These include(a) investing in unlisted equity shares of companies providing property management or property maintenance and other incidental services exclusively to the REIT, its HoldCo(s) and SPV(s), and (b) where the entire shareholding or interest in such company is held by REIT either directly or through its HoldCo(s) or SPV(s). Further, in case of business parks, townships and other real estate projects, such services may be provided to other entities which are contiguous within the project, subject to certain prescribed conditions. Read more

 

SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2025

SEBI, vide notification dated April 29, 2025, has amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The amendments include additional disclosures on the outstanding litigations and material developments in relation to the originator or servicer or any other party to the transaction which could be prejudicial to the interests of the investors and disclosures about defaults in connection with servicing obligations undertaken by servicer. These must be disclosed by special purpose distinct entity or its trustee to the stock exchange on an annual basis. For grievance redressal related to securitised debt instruments, the SCORES registration may be obtained at the trustee level, covering all special purpose distinct entities for which they act as trustee. Read more

 

SEBI redefines high value debt listed companies

SEBI amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 pursuant to the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2025 (“LODR Amendment”). The LODR Amendment has redefined High Value Debt Listed Entities (“HVDLEs”) to mean entities with outstanding listed debt securities of a minimum value of INR 1,000 crore (Indian Rupees one thousand crore) from INR 500 crore (Indian Rupees five hundred crore). Further, as a key change, HVDLEs (which do not have their specified securities listed) are required to obtain a prior consent from debenture holders for undertaking any material-related party transactions.

For a detailed analysis, please refer to the JSA Prism of April 28, 2025.

 

Governance of technical glitches in stock broker’s electronic trading systems – moving towards a more balanced framework

The stock exchanges, in consultation with SEBI and stakeholders, have released circulars dated March 28, 2025 (“SE Circular”) providing certain clarifications with regards to the regulatory regime surrounding ‘technical glitches’ in the stock brokers trading systems. The changes inter alia include certain clarifications to what constitutes a technical glitch as well as a revised penalising structure and reporting formats, all of which, are welcome changes to an otherwise strict regime. While this may bring some relief to the stock brokers on the consequences of having a technical glitch in their systems, it is to be noted that the overall intent and compliance norms remain the same. That said, the move does signify the cognisance given by the regulators to the complexities involved in compliance with the regulatory framework in this regard, and the issuance of the SE Circular could pave the way for future amendments to bring further clarity to certain nuances and/or compliance mechanism, associated with the framework.

For a detailed analysis, please refer to the JSA Prism of April 9, 2025.

 

Investment in listed debt securities (rated A or below) by Category II Alternative Investment Funds will be considered as investments in unlisted securities

SEBI, vide its board meeting dated March 24, 2025, has proposed a key amendment to Regulation 17(a) of the SEBI (Alternative Investment Funds) Regulations, 2012. This regulation requires Category II Alternative Investment Funds (“AIFs”) to invest primarily in unlisted securities i.e., more than 50% of the investible funds in unlisted securities. Pursuant to this amendment, investments by Category II AIFs in listed debt securities rated ‘A’ or below will now be treated as investments in unlisted securities for the purpose of their compliance with minimum investment conditions in unlisted securities.

For a detailed analysis, please refer to the JSA Prism of April 11, 2025.

 

Clarifications to cybersecurity and cyber resilience framework for SEBI regulated entities

SEBI, vide circular dated April 30, 2025, has revised the thresholds and categorisation of certain Regulated Entities (“REs”). The category of REs must be decided at the beginning of the financial year based on the data of the previous financial year. Once the category of RE is decided, RE must remain in the same category throughout the financial year irrespective of any changes in the parameters during the financial year. The category must be validated by the respective reporting authority at the time of compliance submission. In case an RE is registered under more than one category of REs, then the provision of the highest category under which such an RE falls will be applicable to that RE. Read more.

 

DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE (DPIIT)

Revision in criteria for industrial entrepreneur memorandum acknowledgement

On April 1, 2025, DPIIT issued Press Note 1 (2025 series) (“Press Note”) to increase the thresholds for industrial undertakings required to obtain an Industrial Entrepreneur Memorandum (“IEM”) acknowledgment. This Press Note aligns the IEM acknowledgement criteria with the recently revised thresholds for classification as micro, small, and medium enterprises. This move significantly reduces compliance requirement for a wide range of industrial undertakings who were earlier required to obtain an IEM acknowledgement. In addition to harmonising regulatory frameworks, it is expected to ease operational burdens, encourage industrial growth, and foster a more business-friendly environment and thereby encourage higher investments.

For a detailed analysis, please refer to the JSA Prism of April 14, 2025.

 

Press Note 2 (2025 series) clarifies on the issuance of bonus shares by Indian companies engaged in sectors prohibited for foreign direct investment

On April 7, 2025, DPIIT, through Press Note 2 (2025 series) (“PN2”), has issued a clarification concerning the issuance of bonus shares by Indian companies operating in sectors where Foreign Direct Investment (“FDI”) is prohibited.

As per Schedule I of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, FDI is prohibited in lottery business, gambling and betting, chit funds, Nidhi companies, trading in transferable development rights (TDRs), real estate business or construction of farmhouses, manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes, and activities/sectors not open to private sector investment (“Sectors Prohibited for FDI”).

There was ambiguity on whether Indian companies engaged in Sectors Prohibited for FDI could issue bonus shares to its shareholders (which, by implication would have included extending the bonus offer to non-resident (“NR”) shareholders) under the ‘automatic’ route. Pursuant to the PN2, the government clarified the position that such companies (i.e., Indian companies engaged in Sectors Prohibited for FDI) are allowed to issue bonus shares to NR shareholders, so long as there is no change to the shareholding pattern of the NR shareholders of the issuer Indian company. The PN2 provides clarity for the Indian companies operating in sectors where FDI was originally permitted but is now prohibited. For example, it was through Press Note 2, dated May 10, 2010, that FDI was prohibited in the manufacturing of cigarettes.

For a detailed analysis, please refer to the JSA Prism of April 15, 2025.

 

MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY (MeitY)

Electronics Component Manufacturing Scheme, 2025

MeitY, vide notification dated April 8, 2025, has introduced the Electronics Component Manufacturing Scheme (“ECM Scheme”). This initiative is aimed at bolstering domestic electronics manufacturing, minimising import dependence, and strengthening India’s integration into global supply chains.

The ECM Scheme provides incentives for the sub-assembly of manufacturing equipment to foster an integrated framework that enhances operational efficiency and production capacity. This scheme cultivates a resilient and interconnected manufacturing ecosystem strengthening the domestic industrial capabilities and aiding manufacturers in boosting production in India.

For a detailed analysis, please refer to the JSA Prism of May 7, 2025.

 

RESERVE BANK OF INDIA (RBI)

Foreign Portfolio Investors

Limits for investment in debt and sale of credit default swaps by Foreign Portfolio Investors

RBI, vide circular dated April 3, 2025, has introduced investment limits for Foreign Portfolio Investors (“FPIs”) in debt instruments. These investment limits for FPIs are as follows:

• the limits for FPI investment in Government Securities (“G-Sec”), State Government Securities (“SGSs”), and corporate bonds will remain unchanged at 6%, 2%, and 15%, respectively, of the outstanding stocks of securities for 2025-26;
• all investments by eligible investors in the specified securities will be reckoned under the fully accessible route;
• the incremental G-Sec limit has been evenly split (50:50) between the general and long-term sub-categories;
• all additional limits for SGSs have been allocated to the general sub-category;
• the revised investment limits for FPIs in G-Sec general, G-Sec long term, SGS general, SGS long term and corporate bonds, will be implemented in 2 (two) phases, i.e., April to September 2025 and October 2025 to March 2026, with gradual increases across all categories; and
• the aggregate limit of the notional amount of credit default swaps sold by FPIs will be 5% of the outstanding stock of corporate bonds. Accordingly, an additional limit of INR 2,93,612 crore (Indian Rupees two lakh ninety-three thousand six hundred and twelve crore) is set out for 2025-26. Read more

 

Amendment to the Master Circular for FPIs, Designated Depository Participants and Eligible Foreign Investors

The Master Circular for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors dated May 30, 2024, mandated additional disclosures for FPIs that individually, or along with their investor group, hold more than INR 25,000 crore (Indian Rupees twenty-five thousand crore) of equity asset under management in the Indian markets. SEBI, vide circular dated April 9, 2025, has increased this threshold from INR 25,000 crore (Indian Rupees twenty-five thousand crore) to INR 50,000 crore (Indian Rupees fifty thousand crore). Read more

 

Compounding of contraventions under FEMA, 1999

RBI vide circulars dated April 22, 2025, and April 24, 2025, has amended the framework for compounding of contraventions under Foreign Exchange Management Act, 1999 (“Circulars”). The key amendments are:

• deletion of provision contained at Paragraph 5.4.II.v of the Circulars, which linked the sum for which contravention is compounded (i.e., compounding amount) payable to earlier compounding order. The applicant will be deemed to have made a fresh application, and the compounding amount payable must not be linked to the earlier compounding order;
• updation of application format, which will require the applicant to provide additional details such as: mobile number of the applicant/authorised representative, RBI office to which application fee amount has been paid, and mode of submission of the application concerned, in their application; and
• introduction of a discretionary cap of INR 2,00,000 (Indian Rupees two lakh) for the compounding amount per rule or regulation contravened in relation to ‘other non-reporting violations’ under row 5 of the computation matrix provided in the Compounding Guidelines. The relevant violations include contraventions in the nature of receiving investment from ineligible foreign investors, violating end-use restrictions for foreign exchange, making payments to non-residents without required approvals. Read more

 

Proposed framework on securitisation of stressed loans

RBI has issued the Draft Directions on Securitisation of Stressed Assets on April 9, 2025 (“Draft Directions”). The Draft Directions sets out a Framework for Securitisation of Stressed Assets (“Stressed Asset Securitisation Framework”) to be undertaken by specified REs of the RBI.

The Stressed Asset Securitisation Framework is set to deepen the secondary market of stressed loans by providing more flexibility to the banks and financial institutions to convert illiquid loans into tradable securities. Further, it will provide a broader mechanism for the REs to undertake securitisation of their stressed loan exposures, similar to the framework applicable to securitisation of standard assets. RBI seemed to have responded to the industry requests and have considered a balance approach for securitisation of stressed loans. RBI’s approach aligns with the global securitisation practices. Such alignment can make Indian securitised products in stressed loans more attractive to international investors and facilitate cross-border investment flows.

For a detailed analysis, please refer to the JSA Prism of April 25, 2025.

 

Proposed framework on partial credit enhancement

RBI has issued the draft guidelines on non-fund-based credit facilities on April 9, 2025 (“Draft Guidelines”). The Draft Guidelines propose a new and overhauled Framework for Partial Credit Enhancements (“Proposed PCE Framework”) to be issued by REs. The Proposed PCE Framework intends to revamp the existing Partial Credit Enhancements (“PCE”) Framework introduced by the RBI pursuant to the circular dated September 24, 2015, on ‘PCE to Corporate Bonds’, as amended.

The Proposed PCE Framework is amongst the latest initiatives to bolster the growth in the infrastructure sector. This was outlined by the Government of India in the latest Union Budget which contemplated the setting up of a partial credit guarantee scheme for corporate bonds for infrastructure to address liquidity concerns. The Proposed PCE Framework will enable the issuers with a credit rating of less than ‘AA’ to access the bond market and not restrict their funding source to bank financing for infrastructure projects.

For a detailed analysis, please refer to the JSA Prism of April 21, 2025.

 

JSA UPDATES

The Supreme Court of India validates exclusive jurisdiction clauses in employment contract easing litigation for employers

The Hon’ble Supreme Court of India (“Supreme Court”) has upheld the validity of exclusive jurisdiction clauses in employment contracts. In the case of Rakesh Kumar Varma vs. HDFC Bank Limited and HDFC Bank Limited vs. Deepti Bhatia, the Supreme Court has clarified that when employees sign agreements with their employers specifying a particular court for dispute resolution, even if it’s distant from the place of posting, such clauses can be valid.

This decision ensures that employers can confidently designate a specific jurisdiction for legal disputes, even if their workforce is geographically dispersed. For employers managing a pan-India presence, this judgment serves as a beacon of relief, eliminating the daunting prospect of litigating in multiple states merely due to the geographical distribution of their employees. By allowing parties to designate a specific jurisdiction for disputes, the Supreme Court has not only streamlined the litigation process but also mitigated the complexities of navigating multiple legal frameworks in different states. Employers can now approach disputes with greater confidence, knowing that they can rely on a pre-determined legal framework, ultimately fostering a more stable and predictable business environment. In this way, the Supreme Court’s decision not only upholds contractual autonomy but also supports the broader goal of facilitating efficient and effective business operations across India.

For a detailed analysis, please refer to the JSA Prism of April 23, 2025.

 

Supreme Court declares Rule 55A(i) of the Tamil Nadu Registration Rules, 1949 ultra vires the Registration Act, 1908

The Supreme Court in K. Gopi vs. Sub-Registrar and Ors. held Rule 55A(i) of the Tamil Nadu Registration Rules, 1949 (“Registration Rules”) ultra vires the Registration Act, 1908. Under Rule 55A of the Registration Rules, the sub-registrar cannot register any documents unless the original title documents and encumbrance certificates relating to the property are verified. This brought in a challenge for many bona fide owners to transact their property in the absence of original title documents. The Supreme Court has now come to their aid, and it reemphasises that the Sub-Registrar, being a procedural authority performing administrative functions, cannot refuse to register an instrument on the basis that the executant lacks title to the property.

For a detailed analysis, please refer to the JSA Prism of April 24, 2025.

 

Supreme Court holds that an arbitration agreement will be governed by Indian law where foreign location is not the seat but is only the venue of arbitration, and the substantive contract is governed by Indian law

The Supreme Court in Disortho S.A.S vs. Meril Life Sciences Private Limited, has exercised jurisdiction under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and appointed a sole arbitrator, wherein the dispute settlement clause in the contract, provided for disputes to be settled by arbitration in Bogota DC, Colombia, in accordance with the rules of the Arbitration and Conciliation Centre of the Chamber of Commerce of Bogota DC. The judgement is an addition to the earlier judgements of the Supreme Court, wherein the Supreme Court had discussed the complexity involved in interpretation, when different legal systems come into play in contracts involving parties from different jurisdictions. The judgement underscores the importance of carefully drafting arbitration clauses, especially in international contracts, to avoid jurisdictional ambiguities.

For a detailed analysis, please refer to the JSA Prism of April 16, 2025.

 

The Supreme Court reiterates that in the absence of privity of contract, a complainant cannot be a ‘consumer’ under the Consumer Protection Act, 1986

The Supreme Court has in the matter of M/s. Citicorp Finance (India) Limited vs. Snehasis Nanda, reiterated that without privity of contract between a complainant and respondent, the complainant will not qualify as a ‘consumer’ under the Consumer Protection Act, 1986. While arriving at its findings, the Supreme Court also reiterated that the mere presence of an arbitration agreement in a contract would not oust the jurisdiction of a consumer court.

For a detailed analysis, please refer to the JSA Prism of April 4, 2025.

 

Supreme Court reaffirms limited scope of appeal under Section 37 of Arbitration Act

In the case of M/s. C&C Constructions Limited vs. IRCON International Limited, the Supreme Court re-affirmed that Section 37 of the Arbitration Act grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34 of the Arbitration Act. The Supreme Court also examined the validity of Clause 49.5 of the General Conditions of Contract which barred the appellant/contractor from claiming damages or compensation for delays caused by the respondent/employer’s failure to fulfil its contractual obligations.

For a detailed analysis, please refer to the JSA Prism of April 4, 2025.

 

Andhra Pradesh eases working conditions for the Information Technology and Information Technology-Enabled Services sector to boost operational flexibility

In 2002, the Government of Andhra Pradesh first issued a notification exempting Information Technology (“IT”) and IT-Enabled Services (“ITeS”) establishments from certain provisions of the Andhra Pradesh Shops and Establishments Act, 1988 (“AP S&E Act”), for a period of 5 (five) years, effective from May 30, 2002. This exemption has been renewed periodically to support the growth of the IT and ITeS sector within the State. Most recently, on March 25, 2025, the Andhra Pradesh Government issued a new notification, which further extends the exemption under the AP S&E Act for a period of 5 (five) years, effective from March 25, 2025, subject to fulfilment of certain conditions. This extension is expected to increase the operational flexibility of the IT / ITeS companies in Andhra Pradesh. The conditions issued by the State Government related to the working hours, overtime wages, weekly offs, and security of female employees ensure that the broader objectives of employee welfare, fair treatment, and workplace equity are not compromised in the pursuit of operational efficiency. This move underscores the State Government’s continued commitment to creating a conducive environment for the IT/ITeS sectors, which remain a cornerstone of the State’s economic growth.

For a detailed analysis, please refer to the JSA Prism of April 5, 2025.

 

Key Changes under the Maharashtra Stamp (Amendment) Act, 2025

The Maharashtra Stamp (Amendment) Act, 2025 enacted on April 1, 2025, introduced several key changes to the Maharashtra Stamp Act, 1958. The amendments, inter alia, are intended to ease stamp duty compliance by streamlining the process of online payment of stamp duty and enabling the issuance of e-stamp certificates for validation of duty paid. However, the amendments also introduce a significant increase in the upfront costs associated with the stamp duty adjudication process. Specifically, applicants are now required to pay the deficit stamp duty in advance of adjudication, along with an increased application fee. This is likely to impact the financial considerations of transacting parties in Maharashtra significantly. Furthermore, the stamp duty payable in a single transaction is expected to escalate as a consequence of these amendments.

For a detailed analysis, please refer to the JSA Prism of April 16, 2025.

 

This Newsletter has been prepared by:

Probir Roy Chowdhury Partner	Tanavi Mohanty Partner	Soumya Bhargava Senior Associate
Soumya Pradhan Senior Associate	Ritwik Guha Mustafi Associate

 

For more details, please contact [email protected]