The individual investment cap rises from 5% to 10%, while the aggregate limit for all such investors jumps from 10% to 24%. The move aims to broaden India’s equity capital base, improve market depth, and attract stable, long-term capital. | Photo Credit:
In a bid to allow non-resident individuals (NRIs) and overseas investors to take larger direct stakes in Indian listed companies, the Union Budget has sharply increased the investment limits under the Portfolio Investment Scheme (PIS).
Under the proposed framework, the individual investment cap has been raised from 5 per cent to 10 per cent, while the aggregate limit for all such investors has been increased from 10 per cent to 24 per cent.
Previous Restrictions
Earlier, the relatively low ceilings on participation by overseas individuals restricted the scale of participation, forcing most foreign equity flows to come through the registered Foreign Portfolio Investor (FPI) route rather than through direct shareholding.
The government’s move is aimed at broadening the equity capital base, improving market depth and attracting longer-term, more stable pools of capital, particularly from the Indian diaspora.
“This represents a structural shift, not a marginal tweak. Until now, foreign capital largely flowed through institutional channels—FPIs, offshore funds, the usual suspects. By opening direct access to individuals, India is diversifying its capital base, which should, over time, reduce volatility, improve liquidity and bring longer-duration money into the market,” said Mitesh Shah, CEO at Equirus Family Office.
Overseas inflows
Enhanced flexibility in this framework is expected to also support market liquidity and more efficient price discovery, said Moin Ladha, Partner at Khaitan & Co. “It is likely to facilitate greater participation of NRI capital and improve access to stable, long-term overseas funds. Going forward, continued clarity and calibrated liberalization in this space would be welcome, as they can play a meaningful role in strengthening foreign investment inflows into India,” Ladha said.
Tanvi Kanchan, Associate Director and Head of NRI Business at Anand Rathi Share and Stock Brokers, said, “These increases enable foreign investors to build more substantial positions in Indian companies, which could enhance market efficiency, broaden the shareholder base, and foster stronger long-term investment in Indian capital markets.”
Greater participation
Analysts expect the change to encourage greater participation from NRIs in fundamentally strong companies and reduce reliance on short-term foreign flows. The actual impact, however, will depend on ease of execution, regulatory clarity and overall market sentiment. Over time, greater direct overseas ownership could improve price discovery, enhance corporate governance by broadening the investor base, and make Indian markets more resilient to volatile global capital flows.
Published on February 1, 2026