Govt Widens Stock Market Access For Foreign Individuals; PIS Route Extended Beyond NRIs And OCIs

India has expanded access to its listed equity markets for overseas investors, allowing all individual persons resident outside India (PROIs) to invest through the Portfolio Investment Scheme (PIS).

Until now, this route was available only to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The Department of Economic Affairs has notified the amended rules under the Foreign Exchange Management Act (FEMA). The revised rules took effect on 12 June 2026.

The move was part of a broader set of measures announced on 5 June to curb capital outflows and support a weakening rupee, which has been under pressure amid the West Asia conflict. The rupee closed at 95.08 against the dollar on Friday, recovering from 95.74 on 4 June.

What Has Changed

The revised framework doubles the individual investment limit. An overseas individual investor can now hold up to 10% of the total paid-up equity capital of a listed Indian company, up from 5% previously.

The same limit applies to holdings in debentures, preference shares or share warrants. The aggregate ceiling for all such overseas individual investors in a single company has been raised to 24% from 10%.

The notification effectively replaces references to NRIs and OCIs in the existing rules with the broader term "individual persons resident outside India," opening the portfolio investment route to a wider pool of global retail investors. The amended rules also align the treatment of these investors with norms applicable to foreign portfolio investors.

Safeguards Retained

The government has kept safeguards in place for investments from countries sharing a land border with India. Any investment that could result in the transfer of ownership or control of a listed company to entities or citizens of such countries, or where the beneficial owner is a citizen of those nations, will still require prior government approval. This is consistent with existing foreign direct investment (FDI) policy.

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Breach And Reclassification Rules

If an individual PROI's holding crosses the 10% threshold, the excess must be divested within five trading days of the breach. Failure to do so results in the entire investment being reclassified as FDI, after which the investor cannot make further portfolio investments in that company.

The investor must also inform the relevant depositories and the company through the designated branch of the authorised dealer within seven trading days from the settlement date.

Sources:

Economic Times

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