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The government is easing equity investment rules for overseas individuals. The move is aimed at widening the foreign investor base. It also seeks to revive foreign flows into Indian stock markets at a time of weak sentiment.

Finance Minister Nirmala Sitharaman on Sunday proposed major changes to equity investment norms for persons resident outside India (PROI). The Union Budget 2026 proposes to double the individual shareholding limit to 10 per cent from 5 per cent. The aggregate ceiling has been raised to 24 per cent from 10 per cent.

The Budget also announced a direct equity investment route for overseas individuals through the Portfolio Investment Scheme (PIS).

The PROI category includes non-resident Indians, overseas citizen of India cardholders, foreign citizens, and entities registered outside India. These investors will now be allowed to invest directly in Indian listed shares.

The new framework removes the need to route investments through foreign portfolio investors or limited NRI-only channels.

The Budget simplifies the investment process. It creates a clear and regulated route for overseas individuals. It allows direct participation in Indian equities through PIS.

Under the Portfolio Investment Scheme, overseas investors can buy and sell Indian shares through a special bank account approved by the Reserve Bank of India. The scheme sets defined investment limits. It ensures all trades follow regulatory rules. Funds invested through PIS can be repatriated overseas. The higher limits announced in the Budget will apply under this framework. These limits will still be subject to company-level caps and shareholder approvals.

The move comes at a difficult phase for Indian markets. Foreign investors pulled out around Rs 19 billion in 2025. Another Rs 4 billion was withdrawn in January 2026.

A weak rupee and lower post-tax returns have reduced the appeal of Indian equities. Higher and safer returns available in overseas markets have added to the pressure. The government expects easier access and higher limits to help reverse this trend.

Overseas individuals can invest in shares and bonds of companies listed on Indian stock exchanges. Investment in futures and options is permitted only on a non-repatriation basis and within regulatory limits.

Individual shareholding can rise to 10 per cent under the new proposal. Aggregate holdings can go up to 24 per cent with shareholder approval. All investments must comply with rules set by the Reserve Bank of India and the Securities and Exchange Board of India.

PIS investments are not permitted in sectors such as chit funds, agricultural or plantation activities, farmland-linked real estate, or farmhouse construction.

Intraday trading and short selling are not allowed. PIS accounts cannot be opened jointly. If an investor becomes a resident Indian, the PIS account must be closed and holdings moved to a resident demat account. Investments in exchange-traded derivatives do not carry repatriation benefits.