Union Budget 2026-27 aims to court overseas individuals to bolster markets

The Union Budget proposes higher PIS limits for overseas Indians, a review of FEMA non-debt rules, and LLP reforms for AIFs, aiming to attract long-term diaspora capital and deepen capital markets

Finance Minister Nirmala Sitharaman has proposed to allow Persons Resident Out-side India (PROIs) to invest in equity instruments through the portfolio investment scheme (PIS) route. 

Industry experts said the move is likely to simplify cross-border investments. It would also attract offshore capital and expand the pool of capital available to Indian markets beyond tradi-tional foreign portfolio investors (FPIs). 

"PROI will be permitted to to invest in equity instruments of listed Indian companies through the portfolio invest-ment scheme. It is also pro posed increase the investment limit for an indi vidual PROI under this scheme from 5 per cent to 10 per cent, with an overall investment limit for all indi vidual PROIS to 24 per cent, from the current 10 per cent," the finance minister said in her Budget speech. 

 

Rohit Jain, managing part-ner at Singhania & Co, said the earlier tight caps often led to structuring challenges, forcing investors to opt for fragmented holdings or rely on more com- plex investment routes. 

"With these restrictions now being eased, structuring investments into listed Indian companies should become significantly more straightfor-ward," he added. Aditya Mulki, chief executive officer (CEO) of Navi AMC, said it could help offset the impact of persistent FPI outflows that have weighed on the rupee. 

"Unlike institutional FPIs, which often exit en masse during global shocks, non-resident Indians (NRIs) tend to have a longer-term invest-ment horizon. They could act as a cushion to FII outflows," Mulki said. 

The finance minister also proposed a comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules, which could address long-standing challenges faced by foreign investors. It could also create a more contemporary. user-friendly regulatory framework. 

In addition, the govern-ment announced proposed amendments to the Limited Liability Partnership (LLP) Act to ease compliance for alter-native investment funds (AIFs), many of which are set up as trusts and face opera-tional constraints.