Union Budget 2026: Government to allow persons resident outside India to invest in domestic equities

In a move that can help boost equity capital market liquidity, the government on Sunday (February 1, 2026) proposed allowing Indian non-residents to invest in domestic stocks through the portfolio investment scheme.

Finance Minister Nirmala Sitharaman made the announcement as part of ease of doing business measure in her Union Budget 2026-27 speech.

“Individual Persons Resident Outside India (PROI) will be permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme. It is also proposed to increase the investment limit for an individual PROI under this scheme from 5% to 10%, with an overall investment limit for all individual PROIs to 24%, from the current 10%,” Ms. Sitharaman said in her speech.

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Experts said the step can help increase inflows as well as stabilise the rupee

Himanshu Srivastava, Principal, Manager Research at Morningstar Investment Research India, said allowing individuals resident outside India to invest domestically appears to be a positive reform.

It could prove to be a step toward widening India’s capital market access, improve liquidity and deepen market participation, he said but also added that the wide-ranging implications of the announcement can be assessed only after more details are out.

“Until operational details emerge, investors should view this as a directional signal rather than a near-term catalyst,” he noted.

Manoj Purohit, Partner, Financial Services Tax, Tax & Regulatory Advisory at advisory firm BDO India said the much-awaited amendment has been proposed to open up the Indian capital markets for PROIs.

Indian non-residents understand the sentiment of the Indian capital markets and are keen to invest in them. This welcoming measure will not only increase inflows but also help stabilise the currency and capital markets, he added.

According to Dhruv Chopra, Managing Partner, Dewan PN Chopra & Co, the regulatory shift is designed to reduce the market’s reliance on volatile institutional hot money by courting stable, long-term individual investors.