The central government on Friday announced a slew of measures aimed at attracting foreign investment, including easier investment norms for foreign individuals in Indian equities, expanded investment options for foreign portfolio investors (FPIs) and tax-free income on government securities from April 1, 2026.
The Union Finance Ministry said the move is in line with the government’s commitment to strengthen India’s position as a leading global investment destination and deepen capital markets.
Building on recent initiatives to improve the ease of doing business in the capital markets, the ministry said further reforms have been introduced to make foreign investment in equities and government securities more accessible, efficient and globally competitive.
These measures aim to improve the ease of investment for individual persons resident outside India (PROIs) and FPIs while attracting stable long-term foreign capital inflows.
The government has increased the investment limit for individual PROIs in any company under the scheme from 5% to 10%, while the overall investment limit for all individual PROIs has been increased to 24% from the existing 10%. The changes were formally notified on Friday.
As part of the liberalization announced in the Union Budget 2026-27, individual PROIs will now be allowed to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme, which was earlier available only to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs).
“This notification will facilitate more active mobilization of foreign portfolio capital by leveraging the existing onboarding system already in place for NRI/OCI investors. The simplified onboarding and lower compliance requirements will facilitate ease of doing business, while attracting a broader base of relatively stable individual foreign investors. It will also support greater and more stable foreign inflows into Indian equity markets,” the ministry said.
The government also eased the regulatory framework governing FPI investment in government securities. It removed the short-term investment limit, concentration limit and security-wise limit for FPI investment in government securities under the normal route, while retaining the overall quantitative investment limit of 6% of the outstanding stock of central government securities and 2% of state government securities.
“These measures will help develop a smooth yield curve, and attract steady systematic inflows of long-term, patient foreign capital, including long-term investors such as pension funds, insurance companies and sovereign wealth funds. This is also expected to boost forex inflows to the country,” the ministry said.
In another major move, the government announced tax breaks for foreign investors in government securities to encourage long-term capital inflows from pension funds, insurance firms and sovereign wealth funds.
Recognizing the importance of a competitive tax regime in attracting global capital, the government said investments by FPIs in government securities will be exempted from income tax on both interest income and capital gains.
“This move will align taxation on government securities with many comparable jurisdictions,” the ministry said.
The exemption will be applicable from April 1, 2026, on any interest or capital gains arising to FPIs on or after that date in respect of investments in government securities. Similar income tax exemption has been given to the Bank for International Settlements (BIS) for income from investments in government securities.
“Overall, these reforms are aimed at reducing operational complexities, simplifying market access and providing a more seamless investment experience compared to leading international financial markets,” the Finance Ministry said.
The ministry said these measures are expected to expand the investor base for Indian equities and government securities, while encouraging greater participation from global investors looking to invest in one of the world’s fastest growing major economies.