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Budget 2026: India is making it easier for NRIs to invest in equities
It is now easier to own bigger stakes in Indian companies, invest more flexibly through stock markets and participate in long-term wealth creation tied to the country's growth story
- PUBLISHED: Sun 1 Feb 2026, 1:16 PM
- By:
- Issac John
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India's Budget 2026 has sent a clear signal to the global Indian diaspora: the government wants more NRI money flowing into domestic markets.
By lifting investment caps, easing regulatory bottlenecks and simplifying cross-border rules, Finance Minister Nirmala Sitharaman has positioned overseas Indians as a strategic pillar of India’s capital inflows at a time when foreign institutional investment has turned cautious.
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For NRIs, the message is simple. It is now easier to own bigger stakes in Indian companies, invest more flexibly through stock markets and participate in long-term wealth creation tied to India’s growth story.
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Higher limits
The centrepiece of the Budget’s NRI outreach is the decision to double the individual investment limit for Persons Resident Outside India (PROI), including NRIs, in listed Indian companies from 5 per cent to 10 per cent. At the same time, the aggregate foreign holding cap for this category has been raised from 10 per cent to 24 per cent.
In practical terms, this allows overseas Indians to buy larger equity stakes in Indian firms without hitting regulatory ceilings. For retail NRI investors, it widens portfolio choice. For high-net-worth diaspora investors, it opens the door to more meaningful ownership positions in blue-chip companies.
Market participants say the move aligns India more closely with global norms, where overseas individual investors often enjoy higher participation limits. It also improves liquidity in Indian equities and broadens the shareholder base beyond institutional funds.
PIS boost
Another key reform strengthens the Portfolio Investment Scheme (PIS), a framework that allows NRIs to buy and sell Indian shares through designated bank accounts approved by the Reserve Bank of India.
The timing is significant. Foreign investors pulled out about Rs 19 billion from Indian equities in 2025 and another Rs 4 billion in January 2026. By encouraging diaspora participation through PIS, policymakers are seeking to offset volatile institutional flows with more stable, long-term capital from overseas Indians.
Divam Sharma, co-founder and fund manager at Green Portfolio PMS, said the reforms reduce dependence on foreign portfolio investment structures. “NRIs now get more flexibility to invest directly in Indian equities and participate in the country’s growth without complex routing mechanisms,” he said. He added that the Indian diaspora across the Middle East, North America and Europe represents a large pool of patient capital that can support domestic markets over longer cycles.
Fema simplified
The Budget also promises a broader regulatory shift by simplifying Foreign Exchange Management Act (Fema) rules for Non-Debt Instruments and Overseas Investments. Officials say the objective is to move away from a control-oriented regime towards facilitation.
For NRIs, this could mean faster approvals, fewer compliance hurdles and smoother repatriation of funds. Simplified rules are particularly important for those investing in startups, unlisted companies and alternative assets, where regulatory ambiguity has often been a deterrent.
Analysts say regulatory clarity is as important as higher limits. When overseas investors have predictable rules and faster processes, capital inflows tend to be more durable and less speculative.
Gift city push
The budget also reinforced the government’s ambition to turn Gujarat International Finance Tec-City into a global financial hub. Gift City offers tax incentives, global-standard regulations and simplified cross-border transaction frameworks.
According to Sharma, Gift City’s growing ecosystem makes it easier for NRIs to access international financial products while remaining linked to India’s markets. “It reduces friction in compliance and provides a globally competitive platform for diaspora investors who want to operate in rupee and foreign currency instruments,” he said.
Market impact
Experts believe the PROI reforms could reshape foreign participation patterns in Indian equities. Sonam Srivastava, founder and fund manager at Wright Research PMS, said expanding direct access for overseas individuals diversifies the investor base beyond large institutions.
“Doubling the per-investor cap and raising the aggregate limit creates more headroom in sectors where foreign ownership limits often restrict flows,” she said. Srivastava added that diaspora investors typically have longer investment horizons, which can help stabilise markets, reduce short-term volatility and improve price discovery.
Shashank Udupa, Sebi-registered research analyst and fund manager at Smallcase, said higher overseas participation can also support currency stability. “Portfolio inflows strengthen the rupee, improve liquidity and help lower the cost of equity capital for Indian companies,” he said. He expects sectors such as banking, financial services, capital goods and technology to benefit the most from expanded NRI participation.
What NRIs gain
For overseas Indians, the benefits are tangible. Higher limits mean greater ownership flexibility. Easier rules reduce paperwork and transaction delays. A stronger PIS framework provides direct access to Indian equities without complex fund structures.
In simple terms, NRIs can now invest more, faster and with fewer restrictions. This also allows them to better align their overseas savings with India’s long-term economic expansion, which continues to outpace most major economies.
Bigger picture
Beyond diaspora-focused reforms, the Budget also outlined broader proposals aimed at boosting infrastructure spending, strengthening manufacturing incentives and supporting digital finance ecosystems. Together, these measures are designed to sustain growth momentum and improve corporate earnings visibility — a key driver of equity returns.
For the government, attracting NRI capital is about building a stable investor base that is emotionally and economically tied to India’s future. With Budget 2026, policymakers are betting that overseas Indians will increasingly become partners in the country’s next growth phase.
