New Delhi, June 5 (IANS): The Finance Ministry on Friday announced a series of measures aimed at broadening and simplifying foreign investment in Indian equities and government securities to attract stable long-term foreign capital flows. As announced by Finance and Corporate Affairs Minister Nirmala Sitharaman in the Union Budget 2026-27, individual Persons Resident Outside India (PROI) will now be permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme, a route previously available only to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The investment limit for an individual PROI under the scheme has been raised from 5 per cent to 10 per cent in any company, while the aggregate limit for all individual PROIs has been increased from 10 per cent to 24 per cent. To implement the changes, the Department of Economic Affairs (DEA) is notifying the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026.
According to the Finance Ministry, the reforms will facilitate more effective mobilisation of foreign portfolio capital by leveraging existing onboarding systems for NRI and OCI investors, while simplified procedures and reduced compliance requirements will improve ease of doing business and attract a broader base of stable foreign investors. The government has also expanded the Fully Accessible Route (FAR) for government securities to include new issuances with tenors of 15, 30 and 40 years, as well as Sovereign Green Bonds. Additionally, restrictions related to short-term investment limits, concentration limits and security-wise limits for Foreign Portfolio Investors (FPIs) under the General Route will be removed, while overall investment caps will remain unchanged. Interest and capital gains earned by FPIs on government securities will be exempt from income tax from April 1, 2026. The ministry said these measures are expected to support the development of a smooth yield curve, attract long-term institutional investors such as pension funds, insurance companies and sovereign wealth funds, boost foreign exchange inflows, and provide a more seamless investment environment comparable to leading international financial markets.