In the Union budget FY2026-27, Finance Minister Nirmala Sitharaman announced that individual Persons Resident Outside India (PROI) will be permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme which was hitherto available only to NRIs/OCIs.
The investment limit will be increased for an individual PROI under this scheme from 5 per cent to 10 per cent in any company, with an overall investment limit for all individual PROIs to 24 per cent, from the current 10 per cent, she said.
To implement the announcement, the Department of Economic Affairs (DEA) is notifying the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026.
The notification will facilitate a more proactive mobilisation of foreign portfolio capital by leveraging the existing onboarding systems already in place for NRI/OCI investors, the government said.
Simplified onboarding and reduced compliance requirements would further enhance ease of doing business, while attracting a broader base of relatively stable individual foreign investors. This will also support greater and more stable foreign inflows into Indian equity markets, it added.
The Government has decided to expand the list of specified securities under the Fully Accessible Route (FAR) to also include new issuances in Government securities in tenors of 15, 30 and 40 years as also Sovereign Green Bonds (SGrBs) in the tenors of FAR-eligible securities.
Further, with respect to FPI investments under General Route, it has been decided to remove the three restrictions, viz. short-term investment limit, concentration limit and the security-wise limit for investments by Foreign Portfolio Investors (FPIs) in Government securities, while retaining the overall quantitative investment limit of 6 per cent of the outstanding stock of the Central Government securities and 2 per cent of the State Government securities (SGSs), the government said.
The sub-categories of investment limits, viz., ‘general’ and ‘long-term’ will also be merged into a single limit for investment in Government securities and SGSs, respectively.
These measures will help in development of a smooth yield curve, and attract stable systematic inflow of long-term, patient foreign capital, including long-term investors such as pension funds, insurance companies, and sovereign wealth funds. This is also expected to boost foreign exchange inflows for the country, the government said.
The government has decided to rationalise the tax treatment applicable to investments by FPIs in Government Securities, by exempting such investments from income tax on any interest or capital gain.
This step will align the taxation on G-Secs with many comparable jurisdictions, it said.
The exemption shall be applicable w.e.f. 01.04.2026, i.e. the exemption shall apply to any interest or capital gains arising to FPIs on or after 01.04.2026 in respect of investments in G-Secs.
Similar income-tax exemption is also provided for Bank for International Settlements (BIS) for any interest or capital gains from its investments in G-Secs.
This will ensure stable systematic inflow of durable, patient foreign capital and long-term investors such as pension funds, insurance companies, and Sovereign wealth funds (SWFs).
Overall the measures are expected to expand the investor base for Indian equities and Government Securities and encourage wider participation from global investors seeking exposure to one of the world’s fastest-growing major economies, the government said.
More details Read here: https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2269169®=48&lang=1
