Foreign individuals can now buy Indian stocks directly: Sitharaman

In a landmark policy shift announced during the union Budget 2026 presentation, Finance Minister Nirmala Sitharaman on Sunday said that individual persons residing outside India will be permitted to invest directly in Indian equities through the Portfolio Investment Scheme.

The individual investment limit will be raised from 5 percent to 10 percent, while the aggregate cap for all such foreign individual investors is proposed to increase from 10 percent to 24 percent. This move is aimed at broadening foreign participation in Indian capital markets and deepening investment engagement with global investors.

Advertisement

Sitharaman said the changes would enable serious foreign individual investors to take more meaningful stakes in Indian companies, potentially improving price discovery, deepening shareholding, and supporting long-term capital formation in the country.
Analysts said the measure signals India’s intent to integrate domestic markets more closely with global capital flows and could complement other structural reforms announced in the budget.

Experts and government insiders indicated that the move is part of a broader strategy to strengthen market infrastructure. A market-making framework for corporate bonds and a review of the Foreign Exchange Management framework are expected to further enhance liquidity and investor confidence.

Market experts welcomed the move but noted it comes amid sustained foreign investor outflows from Indian equities, driven by global uncertainties and high valuations. Domestic institutional investors have meanwhile expanded their shareholding base, reflecting rising participation by Indian investors even as foreign involvement has moderated.

While easing portfolio investment limits could restore confidence among overseas investors, some analysts cautioned that structural tax issues, including India’s source-based capital gains taxation framework, may continue to deter certain foreign capital.
The Budget 2026 announcement is seen as a key step in attracting long-term foreign investment while balancing fiscal prudence and financial ecosystem reforms.