Those residing outside India can now invest more in equities, Pg9

Key Highlights:

• Budget 2026-27 proposes increasing the investment limit for Persons Resident Outside India (PROIs) from 10% to 24%.
• The individual investment limit for PROIs is also proposed to increase from 5% to 10%.
• These changes aim to boost foreign investments and strengthen capital inflows into India.
• The Foreign Exchange Management Act (FEMA) rules for non-debt instruments will undergo a comprehensive review.
• India experienced a net FDI outflow for the third consecutive month in November, totaling $446 million.

Detailed Insights:

• The proposed changes will allow PROIs, beyond Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs), to invest in Indian equity markets.
• Currently, PROIs can invest through Foreign Direct Investment (FDI) or Foreign Portfolio Investment (FPI), subject to FEMA regulations.
• The Economic Survey 2025-26 highlighted concerns about a global capital strike impacting the rupee's stability.
• The new measures aim to simplify the investment process for PROIs, reducing compliance costs and boosting market liquidity.
• India faces challenges in sustaining FDI inflows due to heightened global volatility, with significant FII outflows observed in recent months.
• The government is exploring various incentives to attract FDI, drawing lessons from other emerging economies.

Key Concepts Involved:

• PROI (Person Resident Outside India): An individual or entity not meeting India's residency criteria under FEMA.
• FDI (Foreign Direct Investment): An investment made by a firm or individual in one country into business interests located in another country.
• FPI (Foreign Portfolio Investment): Investment in the financial assets of a foreign country such as stocks or bonds.
• FEMA (Foreign Exchange Management Act): An Act of the Parliament of India to consolidate and amend the law relating to foreign exchange.