FA chairman Greg Dyke has suggested introducing a larger quota of homegrown players in an attempt to bring more English talent into teams at the highest level, and subsequently help the national team.
However, Pellegrini believes the Premier League must continue to attract the games top players - regardless of nationality - to keep the standard of play high.
"I think it is important for big teams to bring in the best players, that's the most important thing," said the Chilean.
"All the big leagues need the best players to play every week."
One English player linked with a move to City is Raheem Sterling after he confirmed a new contract with Liverpool had been turned down, but Pellegrini would not be drawn on any rumours.
"I don't think it's just this part of the year – the whole year there are a lot of rumours about us wanting players," he explained.
"I will not talk about rumours as we have so much talk about so many players who may come here and we have a big squad."
