Augmenting its earlier efforts to deepen capital markets and draw a broader pool of global investors, India has thrown open equity investments in listed companies under the Portfolio Investment Scheme to all non-resident individuals not just Non-Resident Indians (NRIs) and Overseas Citizens of India.  

The Finance Ministry’s June 12 amendment in the Foreign Exchange Management (Non-debt Instruments) Rules removes a long-standing restriction that limited portfolio investment under the scheme to Non-Resident Indians and Overseas Citizens of India, potentially bringing foreign retail and institutional investors into a market that has so far remained largely out of their direct reach. Experts say this move aims to attract more foreign capital; however, they have some doubts too.

According to the notification, the heading “Investment by non-resident Indian or an overseas citizen of India” will be substituted by “Investment by an individual person resident outside India including a non-resident Indian or an overseas citizen of India.”  Further, it said that an individual person resident outside India may, on repatriation basis, purchase or sell equity instruments of a listed Indian company and other securities in the manner and subject to the terms and conditions as specified.

“Over time, the amendment will broaden the investor base for listed companies. The increase in caps will also attract NRIs who were earlier restricted from investing more than 5 per cent in one listed entity under the PIS route. Overall, this will reduce dependency on the FPI route,” said Natasha Treasurywala, Senior Partner at Desai & Diwanji.

However, there is a rider. “Investment by an individual person resident outside India which results in transfer of ownership or control of the listed Indian company to entities or citizens of a country which shares land border with India or where beneficial owner of such investment is a citizen of any such country, shall require the prior approval of the Government,” the notification said.

Abir Lal Dey, Partner at CMS INDUSLAW, said the amendment also retains the regulatory oversight on scrutiny of beneficial ownership and control, echoing the intent behind Press Note 3. In short, India is liberalising access while ensuring the guardrails on who ultimately owns and controls Indian assets. “The net effect is a calibrated opening: capital is welcome, but only on terms that preserve regulatory oversight and safeguard national security,” he said.

According to Sonam Chandwani, Managing Partner at KS Legal & Associates, while the framework adopts a more liberal approach towards cross border investment, it simultaneously preserves regulatory discipline by imposing investment caps, providing for conversion into FDI upon breach of prescribed limits and retaining mandatory Government approval in cases involving transfer of ownership or control to persons connected with countries sharing a land border with India. In effect, “the changes appear to be aimed at encouraging greater foreign participation without diluting safeguards relating to beneficial ownership, sectoral restrictions and national security considerations,” she said.

However, there are some doubts too. Mayank Arora, Associate Partner (Regulatory) at Nangia Global said the decision seems to be taken with an eye on encouraging foreign investment into India, at a time when there is a flight of capital - both FDI and FPI. “This move, along with aligning the foreign investment limited for portfolio investment under all schedules to 10 per cent qua an individual and 24 per cent qua a Company, may not yield the intended result of increasing foreign investment. The reason for receding interest of foreign investors in India is a factor of structural macroeconomic issues and not regulatory alignment,” he said.

Published on June 14, 2026