The Finance Ministry has expanded equity access for individual PROIs and scrapped key FPI restrictions on government securities in a sweeping capital market overhaul.
The Union Minister for Finance and Corporate Affairs has announced that individual Persons Resident Outside India (PROIs) will now be permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme — a route previously available only to NRIs and OCIs.
The individual investment cap per company has been doubled from 5% to 10%, while the aggregate ceiling for all individual PROIs rises from 10% to 24%.
New rules for equity investment
To implement this, the Department of Economic Affairs is notifying the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026. The move is expected to draw a broader base of relatively stable individual foreign investors, leveraging existing NRI/OCI onboarding systems while reducing compliance requirements.
G-Sec market opened wider
In a parallel reform for the debt market, the government has expanded the Fully Accessible Route for government securities to include new issuances in 15-, 30-, and 40-year tenors, along with Sovereign Green Bonds. Three existing FPI restrictions under the General Route — the short-term investment limit, the concentration limit, and the security-wise limit — have been scrapped entirely, while the overall cap of 6% of outstanding central government securities stock is retained.
Tax exemption to attract long-term capital
In a further move to align India’s tax treatment with comparable global jurisdictions, FPI investments in government securities will be fully exempt from income tax on interest and capital gains, effective April 1, 2026. The Bank for International Settlements has been granted the same exemption.
The reforms together signal an intent to position India as a more accessible and competitively structured destination for global long-term capital, including sovereign wealth funds, pension funds, and insurance companies.
