Overview
- The government’s Third Amendment to the FEMA (Non‑Debt Instruments) Rules came into effect on Friday, June 12, 2026, allowing an "individual person resident outside India" to buy or sell equity of listed Indian companies through the Portfolio Investment Scheme.
- Individual overseas investor limits were doubled to 10% of a company’s paid‑up equity and the aggregate cap for all such investors was raised to 24%, replacing the earlier NRI/OCI‑only language.
- If any investor crosses the 10% limit the excess must be sold within five trading days or the entire holding will be reclassified as foreign direct investment with the investor barred from further portfolio purchases in that company.
- The rules preserve national‑security safeguards by requiring prior government approval for any investment that would transfer ownership or control to entities or beneficial owners from countries that share a land border with India.
- Key operational steps remain unresolved and will determine market uptake: SEBI and the RBI must issue KYC and beneficial‑ownership rules, brokerage and banking procedures, tax guidance, and reporting standards for the new Individual Foreign Investor category.