Individual Persons Resident Outside India Can Now Invest Directly Through Portfolio Investment Scheme
The Government of India has notified significant amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, effectively opening the country's listed equity markets to all individuals residing outside India ' not just Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The notification, which came into force on June 12, 2026, represents one of the most significant liberalisation measures in India's foreign portfolio investment regime in over a decade.
The key changes are threefold. First, Individual Persons Resident Outside India (PROIs) ' a category that now includes any foreign national, regardless of ancestry or former citizenship ' can invest directly in listed Indian equities through the Portfolio Investment Scheme (PIS), a facility previously limited exclusively to NRIs and OCIs. Second, the individual investment limit in any listed company has been raised from 5% to 10%. Third, the aggregate investment limit for all individual PROIs combined has been increased from 10% to 24% of a company's paid-up capital.
What the Changes Mean for Indian Markets
The amendments are designed to attract larger and more stable foreign capital inflows into Indian equity markets at a time when global investors are increasingly looking to diversify beyond China. The Sensex responded positively to the development, surging over 1,155 points in early trade on June 15, with the Nifty approaching 24,000.
The timing is significant. The move comes just days after India and the United States concluded a new bilateral trade agreement, and as the US-Iran peace deal has eased geopolitical tensions and oil price pressures. The combination of trade liberalisation, geopolitical stability, and investment regime liberalisation creates a favourable environment for foreign capital inflows.
Separately, the government has also eased rules for investments from countries sharing land borders with India. Under the updated framework, overseas firms with up to 10% Chinese ownership can now invest in India without prior government approval ' a relaxation of the stricter Press Note 3 (2020) regime that had required mandatory government clearance for all investments from entities based in or having beneficial ownership from countries sharing a land border with India.
India Angle: Attracting the Global Retail Investor
The expansion of PIS eligibility to all foreign individuals is a strategic move to capture a portion of the global retail investment flows that have historically been directed primarily towards US, European, and Chinese markets. India's equity market has delivered annualised returns of approximately 12-14% in rupee terms over the past two decades, making it one of the best-performing emerging markets globally.
The move also complements the government's broader financial market reform agenda. India has been working towards inclusion in global bond indices, upgrading its market infrastructure, and harmonising its regulatory framework with international standards. The FEMA changes align with these efforts by removing a long-standing barrier that prevented non-diaspora foreign individuals from directly participating in India's equity growth story.
For context, the Vedanta demerger listing today and the broader market rally underscore the depth of corporate activity that foreign investors can now access more directly. India is also attracting significant foreign direct investment in sectors like data centres ' including the Meta-Reliance Jamnagar deal and AirTrunk's 0 billion commitment ' and semiconductors, signalling broad-based foreign interest beyond portfolio flows.
Sources
- Moneycontrol ' India expands access to listed stocks for overseas investors as Centre notifies FEMA changes (moneycontrol.com)
- The Hindu BusinessLine ' Stock Market Live June 15: Sensex jumps 1,155 points (thehindubusinessline.com)
- CA Club India ' New FDI Rules: Key Changes Under FEMA 2026 (caclubindia.com)
- Economic Times ' Govt eases FDI norms under FEMA for up to 10% Chinese stake (economictimes.indiatimes.com)
