The Reserve Bank of India has unveiled comprehensive measures to attract greater foreign participation in India's equity and debt markets, including higher investment limits for overseas investors in listed shares, wider access to government securities, and relaxation of investment restrictions for foreign portfolio investors (FPIs). According to The Hindu BusinessLine, these measures are expected to support capital inflows, improve liquidity in domestic financial markets and strengthen demand for government bonds amid an uncertain global environment. The reforms allow all individual Persons Resident Outside India (PROIs) to invest in listed domestic companies through the Portfolio Investment Scheme (PIS), a route that was previously available only to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). As per The Hindu BusinessLine, RBI Governor Sanjay Malhotra announced these changes, stating that investment rules for NRIs, OCIs, and PROIs in the Indian equity market have been relaxed. The government has also announced that the Portfolio Investment Scheme, which was hitherto available only to NRIs and OCIs, has now been extended to all individual Persons Resident Outside India, as confirmed by Tanvi Kanchan, associate director and head of NRI business at Anand Rathi Share and Stock Brokers.
The government has doubled the individual investment limit under the scheme from 5 per cent to 10 per cent of a company's paid-up equity capital. As reported by The Hindu BusinessLine, the aggregate limit for all such investors has been raised from 10 per cent to 24 per cent. This means foreign individual investors will now be able to acquire significantly larger stakes in Indian companies than before. The changes will be implemented through amendments to the Foreign Exchange Management (Non-Debt Instruments) Rules, 2026, as confirmed by Business Standard. According to Anand Rathi Share and Stock Brokers, the change means a much wider pool of overseas investors can directly access Indian equities, with a Singapore-based fund manager, US-based entrepreneur, or UAE-based professional with no Indian ancestry now able to access Indian equities through a simplified, regulated onboarding framework. The finance ministry noted that the revised framework would facilitate greater mobilisation of foreign portfolio capital by leveraging existing onboarding systems for NRI and OCI investors. The RBI has now indicated that both limits will be increased further, although the revised thresholds have not yet been disclosed.
In the debt market, the central bank has expanded the universe of securities available under the fully accessible route (FAR) by including all new issuances of 15-year, 30-year and 40-year government securities. As reported by The Hindu BusinessLine, the FAR framework allows non-residents to invest in specified government securities without investment limits. The RBI has also withdrawn limits relating to short-term investments by FPIs under the general route, a move expected to make participation in the government bond market more flexible. According to The Hindu BusinessLine, the measures come alongside the Centre's decision to exempt foreign institutional investors (FIIs) and the Bank for International Settlements (BIS) from capital gains tax on income earned from investments in government securities with effect from April 1. Market participants said the tax relief, coupled with wider market access, could improve the attractiveness of Indian sovereign debt for overseas investors. The RBI has also introduced temporary incentives for external commercial borrowings (ECBs) and fresh 3-5 year FCNR(B) deposits until 30 September 2026 as part of its broader effort to attract foreign capital.
According to The Hindu BusinessLine, the higher limits significantly expand overseas investment capacity. The changes mean that individuals residing in countries such as the United States, Europe, Japan, Singapore, or elsewhere will now be able to invest in Indian equities through a relatively simpler framework. Adhil Shetty, chief executive officer of BankBazaar, noted that earlier rules limited eligible overseas investors to owning up to five shares out of every 100 shares of a listed company. The revised framework increases this limit to 10 shares per 100 shares, while the combined ownership ceiling for overseas individual investors rises from 10 shares to 24 shares out of every 100. As illustrated by Anand Rathi Share and Stock Brokers, under the revised framework, an investor can invest up to ₹50 crore in a listed Indian mid-cap company with paid-up capital of ₹500 crore, while the overall headroom available to overseas individuals rises to ₹120 crore. The higher aggregate limit from 10 per cent to 24 per cent is now the default, meaning companies no longer need to pass special shareholder resolutions to exceed this level. For wealthy individuals, family offices and investors looking to build larger positions in Indian companies, the distinction between the regular NRI investment framework and the more regulated FPI route is particularly important, as the FPI route requires registration, compliance and ongoing reporting obligations.
The reforms come at a time when foreign portfolio investors have pulled out a record ₹2.63 trillion from Indian equities so far in calendar year 2026, according to exchange data reported by Business Standard. However, domestic institutional investors have offset much of this selling with purchases exceeding ₹4 trillion. According to Prime Database, NRI shareholding in NSE-listed companies stood at 0.62 per cent, valued at ₹2.5 trillion, as of March 2026, compared with 0.63 per cent, or ₹2.57 trillion, a year earlier. Market participants believe the reforms could support stronger and more diversified foreign participation in Indian capital markets, with the government wanting to broaden the base of foreign capital flowing into India by attracting not only large institutional funds but also individual investors from across the world. The changes are expected to improve liquidity and inflows into the market, with improvement in price discovery and market efficiency. The extension of the facility to all individual PROIs is equally significant, as until now, the relaxation largely benefited NRIs and OCIs, with a broader set of overseas individuals now eligible for the simplified investment framework.
Market experts believe the relaxed investment framework could deepen the capital markets while also benefiting the broader economy. As reported by The Hindu BusinessLine, Dhiraj Relli, managing director and chief executive officer of HDFC Securities, noted that the liberalisation of investment norms for overseas investors "strengthens India's capital account at a time when external financing conditions remain dynamic, while also supporting rupee stability." Saurabh Jain, Head of Fundamental Research at SMC Global Securities, said the move could deepen foreign participation, improve liquidity and strengthen long-term capital inflows into Indian equities. He added that the decision also aligns with India's broader goal of becoming a global financial hub through initiatives like GIFT City. Kaustubh Gupta, CIO – Fixed Income at Aditya Birla Sun Life AMC, said the expansion of FAR and removal of investment restrictions under the general route "should enhance foreign participation in government securities and support the government borrowing programme." Ankita Pathak, Head – Global Investments at Ionic Asset, noted that the combination of FAR expansion, relaxation of investment limits and removal of taxes on interest income and capital gains for foreign investors in government securities "significantly improves the attractiveness of Indian debt markets," with the measures expected to boost foreign participation in government bonds, support softer bond yields and stabilise the rupee. The key question now is how much the investment limits will be raised from the current 10% individual cap and 24% aggregate cap, with the RBI having announced the direction of change but not the final numbers.
