Overseas Investors Get Wider Access to Indian Stocks Under FEMA Amendment

The Centre has notified a FEMA amendment to widen access to listed Indian stocks for overseas individual investors.

The revised rules allow all Individual Persons Resident Outside India to invest in shares of listed Indian companies through the Portfolio Investment Scheme. Earlier, this route was mainly available to Non-Resident Indians and Overseas Citizens of India.

What Has Changed Under the FEMA Amendment?

The government has recently amended the Foreign Exchange Management Rules (Non-Debt Instruments), 2019.

Here are the key changes:

Detail	Updated Rule
Effective date	June 12, 2026
Eligible investor category	Individual Persons Resident Outside India
Investment route	Portfolio Investment Scheme
Earlier access	Mainly NRIs and OCIs
Current access	Wider overseas individual investor base

What Is the Portfolio Investment Scheme?

The Portfolio Investment Scheme allows eligible overseas investors to buy and sell shares of listed Indian companies within prescribed limits.

It is different from Foreign Direct Investment. PIS is used for portfolio-level participation in listed stocks, while FDI is typically associated with strategic investment, ownership, or control.

What Are the New Investment Limits?

The FEMA changes have increased both individual and aggregate holding limits.

Limit Type	Earlier Limit	Revised Limit
An individual overseas investor holding	Up to 5%	Up to 10%
Aggregate holding by all individual PROIs	Up to 10%	Up to 24%

This means one eligible overseas individual can now hold up to 10% of the paid-up equity capital of a listed Indian company.

The combined holding of all such individual investors can go up to 24%.

What Happens If the 10% Limit Is Breached?

If an investor’s holding crosses the 10% limit, the excess stake must be reduced within five trading days.

If this is not done:

• The entire investment will be treated as Foreign Direct Investment
• The investor cannot make further portfolio investments in that company

This rule helps keep portfolio investment separate from FDI-style ownership.

What Investments Safeguards Will Still Apply?

The government has retained safeguards for investments involving countries that share a land border with India.

Prior government approval will still be needed if a transaction results in ownership or control being transferred to entities from such countries.

The same condition applies when the beneficial owner is a citizen of those countries.

Difference Between FERA and FEMA: Full Forms and Key Differences

How Can This Support Foreign Investment in the Indian Stock Market?

The FEMA amendment can make Indian listed shares more accessible to overseas individual investors.

It may help:

• Widen the investor base
• Improve participation in Indian equities
• Attract more stable foreign capital flows
• Align overseas individual investment rules more closely with the FPI framework
• Support deeper market participation over time

Final Outlook

The FEMA amendment marks a broader opening of India’s listed stock market for overseas individual investors.

Going ahead, the key factors to watch will be investor participation, compliance with the revised limits, and whether the expanded route helps bring more stable foreign capital into Indian equities.

Source: https://www.moneycontrol.com/

Disclaimer: This content is for education and awareness purposes only and should not be considered investment advice or a recommendation. Investments in securities markets are subject to market risks. Read all the related documents carefully before investing.