New Delhi – The Indian Finance Ministry has announced a significant expansion in the class of overseas individual investors permitted to invest in listed Indian equities. Effective from the Union Budget FY2026-27, all individual persons resident outside India can now purchase or sell equity instruments of listed Indian companies on a repatriation basis.
FEMA Rules Amended to Broaden Investor Base
Previously, investment in listed Indian firms' equity instruments was restricted to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The recent amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, specifically the Third Amendment Rules, 2026, broaden this definition to include any individual person resident outside India, regardless of their ancestral ties to the country.
This policy change fulfills an announcement made by Finance Minister Nirmala Sitharaman in the Union Budget FY2026-27, aiming to deepen investment in Indian markets. The Department of Economic Affairs (DEA) officially notified these changes on June 14, 2026.
Key Conditions and Safeguards
While the new rules open up a vast universe of global investors, a crucial safeguard remains in place. Any investment that results in the transfer of ownership or control of a listed Indian company to entities or citizens of a country sharing a land border with India, or where the beneficial owner is a citizen of such a country, will require prior approval from the Indian government.
Expert Perspective on the Investment Shift
Sindhuja Kashyap, Partner at King Stubb & Kasiva, Advocates and Attorneys, highlighted the transformative nature of this amendment. "Until now, this pathway was available only to those with roots in India, NRIs and OCIs whose connection to the country was defined by origin or descent," Kashyap noted. "The amended framework changes that. Any individual living outside India, regardless of nationality, can now invest in listed Indian companies on a repatriation basis, without navigating the institutional complexity of the FPI route or the permanence associated with FDI."
Kashyap further emphasized that the Third Amendment Rules, 2026, represent an act of confidence in India's markets and its regulatory architecture. However, she stressed the immediate need for market regulators like SEBI and the Reserve Bank of India to issue swift operational guidance regarding KYC (Know Your Customer) and beneficial ownership verification for this newly expanded class of investors, for whom existing frameworks were not originally designed.