For the first time, India is opening its stock market to a wider group of foreign investors.
Budget 2026 has proposed a major change that will allow foreign individuals living outside India to invest directly in listed Indian companies.
This move is expected to bring more global capital into Indian markets and make investing easier for overseas investors.
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Who Can Invest Under the New Rule
Under Budget 2026, individual “Persons Resident Outside India” (PROI) will be allowed to invest in Indian equities through the Portfolio Investment Scheme (PIS).
Until now, this route was mainly limited to Non-Resident Indians (NRIs) and registered Foreign Portfolio Investors (FPIs).
A PROI includes anyone who does not meet India’s residency rules under FEMA.
This group goes beyond NRIs and covers foreign citizens from countries like the US, Europe, and the Middle East.
It also includes overseas entities and offices located outside India, even if they are owned or controlled by Indian residents.
In simple terms, if a person or entity is based outside India and is not considered a resident, they will qualify as a PROI.
What Changes With Budget 2026
The proposed change allows PROIs to directly buy equity instruments of listed Indian companies through Indian stock exchanges.
This is being seen as one of the most significant capital market reforms in the Budget.
Along with wider access, the government has also proposed to raise investment limits.
The cap for a single PROI will increase from 5% to 10% in a listed company.
At the same time, the overall investment limit for all PROIs combined will go up from 10% to 24%.
How This Affects NRI Investors
NRIs can already invest in shares of listed Indian companies through the PIS route.
They are also allowed to trade in SEBI-approved exchange-traded derivatives using rupee funds held in India on a non-repatriation basis.
However, there are clear rules. NRIs must take delivery of shares they buy and deliver shares they sell, as short selling is not allowed.
Investments made under this route are not eligible for repatriation benefits.
Key Restrictions Investors Should Know
Shares bought under the PIS by NRIs or foreign investors cannot be transferred through private deals or gifted to residents or non-residents without prior approval from the Reserve Bank of India. These rules are meant to ensure transparency and regulatory oversight.
Why This Move Matters
By allowing PROIs to invest directly in Indian equities, the government is signalling a more open and globally connected capital market.
If implemented smoothly, this change could increase foreign participation, deepen market liquidity, and strengthen India’s position as an attractive investment destination.