Budget 2026: Non-Residents Can Now Invest Directly in Indian Shares

Budget 2026 allows overseas individuals, including NRIs, to invest in Indian shares via Portfolio Investment Scheme. Govt has raised per-investor limit from 5% to 10% and combined limit to 24%. Experts say it will attract long-term foreign capital.

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Budget 2026 opens Indian stock market wider for overseas investors

Union Budget 2026 has introduced a major reform that will make it much easier for people living outside India to invest directly in Indian stock markets. Finance Minister Nirmala Sitharaman announced that individual persons resident outside India (PROI) will now be allowed to buy shares of listed Indian companies directly through the Portfolio Investment Scheme (PIS).

This change removes earlier barriers that limited overseas individuals, including Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs), from taking meaningful stakes in Indian companies.

The move is seen as a strong step to attract long-term foreign money into Indian markets at a time when global investment flows have slowed.

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Higher investment limits announced in Budget 2026

Under the new Budget 2026 proposal, the government has raised key investment limits for overseas individual investors.

The maximum investment limit for one individual PROI in a listed Indian company has been increased from 5 per cent to 10 per cent. At the same time, the total combined investment limit for all such investors in a single company has been raised sharply from 10 per cent to 24 per cent.

Announcing the decision in Parliament, Sitharaman said the higher limits would give overseas individuals more room to invest and support India’s capital markets.

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What this change means for overseas investors

Earlier, tight ownership caps made it difficult for overseas individuals to build a sizeable position in Indian equities. Many had to invest through complex foreign portfolio investor structures or overseas funds.

Budget 2026 now creates a simpler and more direct route. Overseas individuals can invest in Indian shares without depending heavily on institutional or fund-based channels.

This gives NRIs and other global Indians greater control over their investments and a closer link to India’s growth story.

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Government aims to attract stable, long-term capital

Market experts believe the move shows the government’s clear intention to attract patient and long-term foreign capital rather than short-term speculative money.

Higher ownership limits allow serious investors to take meaningful stakes in companies. This can improve price discovery, widen shareholding, and support steady capital formation in Indian businesses.

The reform also positions India well to receive stronger foreign inflows when global markets become more stable and risk appetite improves.

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Experts say reform is timely and strategic

Divam Sharma, Co-Founder and Fund Manager at Green Portfolio PMS, said the government’s push to expand NRI participation is both timely and strategic.

He noted that foreign portfolio investor inflows have slowed recently, making it important to widen the base of long-term investors.

According to Sharma, easing rules under the Portfolio Investment Scheme gives NRIs more flexibility and allows them to invest directly in Indian equities instead of relying only on foreign investment structures.

With large Indian communities across the Middle East, North America, Europe, and Southeast Asia, Sharma believes the reform could unlock a strong pool of long-term capital that matches India’s economic growth path.

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Role of GIFT City in supporting NRI investments

The Budget also highlighted the growing importance of Gujarat International Finance Tec-City (GIFT City) as a global financial hub.

Experts say GIFT City offers a strong regulatory environment and modern financial infrastructure, making it easier for NRIs to invest in India.

Sharma pointed out that streamlined rules and wider product access through GIFT City can further simplify compliance for overseas investors and support cross-border financial services.

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Broader foreign participation without higher risk

Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, said the expansion of the Portfolio Investment Scheme signals India’s intent to diversify foreign participation beyond large institutions.

She explained that allowing PROIs to invest directly in equities, while doubling the per-investor limit from 5 per cent to 10 per cent, widens ownership without creating major systemic risks.

Raising the combined foreign holding limit to 24 per cent also increases available space in sectors where investment caps often restrict flows.

Long-term investors help market stability

Srivastava added that overseas individual investors usually stay invested for the long term. This helps improve market liquidity and reduces sharp price swings caused by short-term trading.

Over time, such participation can strengthen price discovery and make Indian markets more resilient.

She said the reform is likely to benefit sectors where stable ownership is important for growth and long-term planning.

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Benefits for companies and the broader economy

Shashank Udupa, Sebi-registered Research Analyst and Fund Manager at Smallcase, told India Today that allowing PROIs to invest directly through PIS is a meaningful step for India’s equity markets.

He explained that higher investment limits can support better company valuations and more stable ownership, especially in large-cap sectors such as banking, financial services, capital goods, and technology.

Udupa also noted that increased portfolio inflows help support the Indian rupee and reduce the cost of equity capital for Indian companies.

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Strengthening India’s global investment appeal

Taken together, the measures announced in Budget 2026 aim to deepen India’s capital markets and diversify foreign investment sources.

By making it easier for overseas individuals to invest directly, the government is aligning Indian equity markets more closely with global investment practices.

The reforms also strengthen India’s position as a high-growth destination for global investors seeking long-term exposure to a stable and expanding economy.