For the first time, the Indian stock market is opening its doors wider to foreign investors.
Budget 2026 has proposed a major change that allows foreign individuals living outside India to directly invest in Indian listed companies.
This move is expected to bring more global money into Indian equities and deepen the country’s capital markets.
Foreign Individuals Can Now Invest in Indian Stocks
Budget 2026 proposes to allow Persons Resident Outside India (PROI) to invest in equity shares of listed Indian companies through the Portfolio Investment Scheme (PIS).
Until now, direct investment in Indian equities was mainly limited to Non-Resident Indians (NRIs) and registered Foreign Portfolio Investors (FPIs).
With this change, individual foreign citizens from regions such as the US, Europe, and the Middle East will also be able to invest directly in Indian stocks.
Experts say this is one of the most significant capital market reforms announced in the latest budget.
Who Is Considered a PROI?
A Person Resident Outside India (PROI) includes more than just NRIs.
It covers any individual or entity that does not meet India’s residency rules under FEMA.
This means foreign nationals, overseas businesses, and entities operating outside India for work, business, or long-term purposes.
Even offices or branches located abroad, if they are outside India’s residency framework, fall under this category.
Simply put, if a person or organisation is based outside India and is not classified as a resident, they are treated as a PROI.
Higher Investment Limits Announced
Budget 2026 has also proposed a sharp increase in investment limits under the PIS.
The individual investment cap for a single PROI is set to rise from 5% to 10%.
At the same time, the combined investment limit for all PROIs in a company will increase from 10% to 24%.
This change gives foreign investors much more room to participate meaningfully in Indian companies.
What About NRI Investments?
NRIs can already invest in shares of listed Indian companies through recognised stock exchanges under the PIS route.
They are also allowed to invest in SEBI-approved exchange-traded derivative contracts using rupee funds held in India on a non-repatriation basis.
However, such investments cannot be repatriated abroad.
NRIs must take delivery of shares they buy and deliver shares they sell. Short selling is not allowed.
Additionally, shares bought under PIS by NRIs or foreign investors cannot be transferred through private deals or gifted without prior approval from the Reserve Bank of India.
This policy shift signals India’s intent to attract a broader pool of global investors.
If implemented smoothly, it could increase market liquidity, boost valuations, and strengthen India’s position as a global investment destination.
