FinMin notifies expanded class of overseas individual investors for listed equities

The Finance Ministry has expanded the definition of overseas individual investors in listed equity investments to include all individual persons resident outside India including non Resident Indians and Overseas Citizens of India under the foreign portfolio investor scheme.

The change has been brought through amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 through a recent notification. Till now, such investments in equity instruments of listed Indian firms was permitted only by NRIs and OCIs.

“An individual person resident outside India may, on repatriation basis, purchase or sell equity instruments of a listed Indian company and other securities in the manner and subject to the terms and conditions as specified in Schedule III,” said the notification.

The move follows the announcement by Finance Minister Nirmala Sitharaman in the Union Budget FY2026-27 that individual Persons Resident Outside India (PROI) will be permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme which was hitherto available only to NRIs and OCIs.

The Finance Ministry had then in its announcements to deepen investments in government securities on June 5 had said that the Department of Economic Affairs (DEA) would be notifying the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026.

The amendment however, clarifies that if such an investment results in transfer of ownership or control of the listed Indian company to entities or citizens of a country which shares land border with India or where beneficial owner of such investment is a citizen of any such country, it shall require the prior approval of the government.

Sindhuja Kashyap, Partner, King Stubb & Kasiva, Advocates and Attorneys noted that 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 and left out a vast universe of global investors who have no ancestral tie to India yet have every reason to participate in one of the world's fastest-growing economies.

“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,” she said.

The Third Amendment Rules, 2026 are, at their core, an act of confidence, in India's markets, its regulatory architecture, and its ability to welcome the world without compromising its own interests. The real work now lies with SEBI and the Reserve Bank, who must move swiftly to issue operational guidance on KYC and beneficial ownership verification for a class of investors that existing frameworks were simply not built for, she further said.