Budget 2026 opens direct equity route for overseas individuals, raises investment caps

MUMBAI: The Union Budget 2026 has opened a new route for overseas individuals to invest directly in Indian equities, allowing Persons Resident Outside India (PROIs)—including NRIs and foreign nationals—to buy listed shares under the RBI’s Portfolio Investment Scheme (PIS).


Under the proposal, the individual investment cap for PROIs has been doubled to 10% of a company’s paid-up capital from 5%, while the aggregate limit for all such investors in a company has been raised to 24% from 10%. The limits apply to shares and convertible debentures purchased on recognised stock exchanges.




Till now, overseas individuals largely accessed Indian equities through foreign portfolio investor (FPI) structures or foreign direct investment routes, both of which involved registration and compliance hurdles. The PIS, earlier limited mainly to NRIs, will now explicitly cover all PROIs, permitting investments on repatriation and non-repatriation bases through designated banks, in line with FEMA rules.


The move follows discussions between Reserve Bank of India and Securities and Exchange Board of India since early 2025 on widening the investor base and supporting inflows amid sustained FPI outflows.


Officials said the objective is to diversify foreign capital sources by attracting overseas retail investors, at a time when FPIs have pared exposure due to valuation concerns and global uncertainties. The government also expects the change to deepen market participation and improve ease of doing business.


For investors, the revised framework offers a simpler, regulated route to Indian equities without the need for FPI registration, though KYC norms and banking channels will continue to apply. Companies could benefit from a broader pool of foreign shareholders, while the overall cap of 24% is intended to prevent excessive dilution of domestic ownership.


The government expects the measure to help channel a portion of diaspora-linked funds into capital markets, supporting foreign exchange inflows. Detailed operational guidelines are expected through an RBI notification in the coming weeks.