Individuals residing overseas will soon be able to invest directly in Indian equities through the Portfolio Investment Scheme (PIS), Finance Minister Nirmala Sitharaman announced on Sunday while presenting the Union Budget 2026. The move marks another major policy shift in her ninth consecutive Budget speech under the Prime Minister Narendra Modi-led government.
The announcement signals a clear attempt to widen India’s investor base at a time when global capital flows into domestic markets have shown signs of strain.
A Timely Move As Foreign Investors Pull Back
The policy change arrives at a sensitive moment for Indian stock markets. Foreign investors withdrew nearly Rs 19 billion during 2025, followed by an additional Rs 4 billion exit in January 2026. Currency volatility and diminishing post-tax returns have made Indian assets less competitive when compared with relatively stable yields available in overseas markets.
Against this backdrop, the government’s push to make equity investments more accessible to Indians living abroad is being closely watched by market participants.
"This Budget comes at a very crucial juncture as far as markets are concerned," said Nimesh Chandan, Chief Investment Officer at Bajaj Finserv Asset Management Limited, ahead of the Budget presentation. He noted that the key focus would be on measures aimed at drawing sustained foreign direct investment (FDI) and foreign portfolio investment (FPI) into the economy.
What The Portfolio Investment Scheme Allows
The Portfolio Investment Scheme enables non-resident Indians and foreign investors to buy and sell shares of Indian companies through a designated bank account approved by the Reserve Bank of India. The framework is designed to ensure regulatory compliance while allowing capital inflows into the equity markets.
Under the scheme, individual investors are typically capped at a 5% stake in a single company, while aggregate foreign investment is limited to 10%. All transactions must adhere to RBI norms, and importantly, the funds invested under PIS are fully repatriable.
Budget 2026 Expands Investment Limits For Overseas Investors
Beyond opening the portfolio route to residents living abroad, the Finance Minister announced several additional measures aimed at easing and expanding non-resident participation in Indian equities.
Key changes include raising the individual investment ceiling for Persons Resident Outside India (PROIs) from 5% to 10%, while increasing the combined investment limit for all such investors from 10% to 24%. The Budget also formally allows residents living overseas to access Indian equities through a structured portfolio investment route.
Broader Reforms And Regulatory Review Announced
Alongside market-focused reforms, Sitharaman proposed a Rs 5,000 crore allocation for the City Economic Regions scheme, underscoring the government’s emphasis on regional economic development.
She also announced a review of Foreign Exchange Management Act (FEMA) rules governing non-debt instruments, a move that could further streamline overseas investment frameworks.
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