"Our concern is about inflows from unregistered entities, especially from unregulated jurisdictions... So long as funds come in after registration, they are welcome to do so," he said at the US-India CEO Forum here.
The statement comes days after market regulator SEBI imposed restrictions on issuance of participatory notes used by unregistered investors to invest in Indian equity markets.
There are about 1,000 registered FIIs and the capital market regulator recently said it would make registrations simpler and faster, Chidambaram said.
He said India wishes to move forward and liberalise the financial sector but it will do so in a careful and calibrated manner.
"We cannot afford shocks," he added.