Direct Investment Route
The Budget 2026 is set to create a simplified pathway for overseas individuals to invest directly in the shares of Indian companies listed on the stock
exchange. This includes Persons of Indian Origin and non-resident Indians. Previously, these investors had to navigate complex institutional or fund-based structures. This direct approach streamlines the investment process, making it easier for individuals abroad to participate in the Indian stock market, thereby increasing the flow of foreign investment into the country. This enhancement is expected to be a game-changer, drawing in more international capital and boosting market activity.
Expanded Investment Limits
A core aspect of Budget 2026 involves adjustments to the investment limits for individual non-resident investors. According to the proposals, the investment cap for a single investor will be doubled, going from 5% to 10%. Furthermore, the overall limit for all such investors in a listed company will rise significantly, from the current 10% to 24%. This expansion offers non-resident investors greater scope to build substantial positions in Indian equities, which was previously restricted by ownership caps. This change signals the government's intention to attract long-term foreign capital and foster a more robust investment climate.
Impact and Implications
The alterations introduced by the Budget are designed to significantly impact the liquidity of the Indian market while also improving how prices are discovered. By eliminating existing limitations, the government is anticipating an influx of more stable, long-term foreign capital. The reforms aim to position India favorably to capitalize on enhanced foreign portfolio inflows when global risk appetite improves and when currency-related anxieties alleviate. The initiative not only invites international investment but also reinforces India's presence on the global financial stage, creating a more conducive environment for economic growth and stability. Finance Minister Nirmala Sitharaman highlighted these changes during her Budget Speech for 2026-27, emphasizing the government's commitment to widening the access for overseas individual investors.
