Government Revises FEMA Rules, Raises Overseas Portfolio Investment Limits

The Centre has amended the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, allowing individual persons resident outside India to invest in listed Indian companies through the portfolio investment scheme, as per ANI news report.  

Earlier, this route was available only to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The revised rules came into force from June 12, 2026. 

Investment Caps Increased 

The notification raises the maximum holding for an individual overseas investor in a listed company to below 10% of the paid-up equity capital, up from the earlier 5% limit. The combined holding of all such overseas investors has also been increased to 24% from 10%. 

The changes apply to investments made on a repatriation basis through recognised channels under the FEMA framework. 

Conditions on Shareholding and Divestment 

If an investor's holding crosses the prescribed limit, the excess shares must be sold within 5 trading days from the settlement date.  

Where the excess investment is not divested within the stipulated period, the entire holding will be treated as foreign direct investment (FDI).  

In such cases, the investor will not be permitted to make further portfolio investments in that company under the scheme. 

Safeguards Continue Under Existing Policy 

The notification also retains restrictions for investments that could result in the transfer of ownership or control of a listed company to entities or citizens of countries sharing a land border with India, or where the beneficial owner belongs to such a country.  

Such transactions will continue to require prior approval from the Government. Investors are also required to notify the depositories and the concerned company if the prescribed limits are breached. 

Read More: India's Retail Inflation Rises to 3.93% in May 2026 as Food Prices Increase! 

Conclusion 

The amended FEMA rules expand the portfolio investment route for overseas individuals while prescribing investment limits and compliance requirements. The changes took effect from June 12, 2026, through a government notification. 

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