The Ministry of Finance, vide Notification No. S.O. 3030(E) dated 12th June 2026, has amended the FEMA (Non-debt Instruments) Rules, 2019, introducing a significant relaxation in regulatory framework governing investments in Indian listed securities by persons residents outside India, including foreign individuals.
The key highlights of the notification are summarized below for ready reference:
| Key Highlights | Particulars |
| Expanded Investor Category |
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| Investment Limits | The amended framework prescribes the following investment limits for individual persons resident outside India, including NRIs and OCIs:
The total holding of an individual investor across all applicable schedules of the FEMA (Non-Debt Instruments) Rules must remain below the prescribed individual investment threshold of 10% of the paid-up equity capital of the Indian company on a fully diluted basis. |
| Breach of 10% Limit – Consequences |
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| Border-Country Safeguard (New Proviso) | Prior Government approval is mandatory where an investment by an individual resident outside India results in transfer of ownership or control of an Indian listed company to:
This approval requirement applies equally to both acquisition of securities (Rule 12) and transfer/sale of securities (Rule 13). Accordingly, any transaction resulting in a direct or indirect transfer of ownership or control to such investors must be evaluated from a regulatory approval perspective prior to its implementation. |
| FPI Investor Group Clarification (Schedule II) | The total holding of Foreign Portfolio Investor including holding through an investor group across all applicable schedules of the FEMA (Non-debt Instruments) must remain below the prescribed individual investment threshold of 10% of the paid-up equity capital of the Indian company on a fully diluted basis.
For this purpose, the term “investor group” carries the same meaning as under the SEBI (Foreign Portfolio Investors) Regulations, 2019. |
The amendment broadens investment opportunities for overseas investors (specifically foreign individual investors) and enhances the permissible investment limits for NRIs and OCIs. The changes are aimed at facilitating foreign capital inflows.
At the same time, the amendment reinforces India’s foreign investment compliance framework by retaining restrictions applicable to investors from countries sharing a land border with India and extending the scrutiny to investments where the beneficial owner is situated in, or is a citizen of, such jurisdictions. Consequently, investments involving citizens or beneficial owners from China, Pakistan, Nepal, Bangladesh, Bhutan, Myanmar, or Afghanistan will continue to be subject to the heightened regulatory oversight and approval requirements.