Budget 2026: Finance Minister Raises PROI Equity Investment Limits to Boost Liquidity

The Union Budget presented on February 1, 2026, announced higher equity investment limits for persons residing outside India (PROI) under the Portfolio Investment Scheme, with the stated aim of enhancing liquidity and tempering price swings in Indian equities. 

Finance Minister Raises PROI Equity Investment Limits 

The new limits allow an individual foreign resident to hold up to 10% of a listed Indian company's equity, double the previous 5% ceiling.  

The aggregate ceiling for all foreign residents combined has been increased from 10% to 24% of a company's equity, providing greater headroom for foreign participation. 

Details of the Revised Limits 

Under the revised framework, a foreign resident can acquire shares up to the 10% per investor threshold provided the total foreign resident holding does not exceed the 24% aggregate cap. 

These limits apply across all listed equities and are enforced through the existing Portfolio Investment Scheme registration process. 

Read More: Union Budget 2026: Historic Budgets That Transformed India’s Financial Landscape! 

Implications for Market Liquidity and Volatility 

Higher caps are expected to attract additional foreign capital, particularly from long‑term investors with personal or economic ties to India.  

Increased foreign ownership can deepen the order book, improve price discovery and reduce short‑term price volatility, especially in mid‑cap and large‑cap stocks where foreign ownership limits were previously binding. 

Regulatory and Compliance Aspects 

The changes are incorporated into the Portfolio Investment Scheme guidelines and will be monitored by the securities regulator to ensure compliance with the overall foreign ownership ceiling. Existing reporting and tax treatment frameworks remain unchanged, providing continuity for current investors. 

Conclusion 

The Union Budget’s decision to raise both per investor and aggregate foreign resident equity limits aims to broaden the shareholder base, improve liquidity and moderate volatility in Indian equity markets while maintaining systemic safeguards. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.