The Centre on Friday announced a series of reforms easing investment norms for Foreign Portfolio Investors (FPIs) and widening access to government securities (G-Secs).
The measures include allowing individual Persons Resident Outside India (PROIs) to invest in listed Indian companies through the Portfolio Investment Scheme, expanding the scope of the Fully Accessible Route (FAR) for government securities, removing certain investment restrictions for FPIs in sovereign debt and exempting interest income and capital gains on G-Sec investments from income tax.
The Ministry of Finance said the reforms are aimed at strengthening India’s position as a global investment destination while improving ease of investment for overseas investors.
Under the revised framework, individual PROIs will be permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme, which was previously available only to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The investment limit for an individual PROI has been increased from 5 per cent to 10 per cent in any company, while the aggregate ceiling for all such investors has been raised from 10 per cent to 24 per cent.
To implement the changes, the Department of Economic Affairs will notify the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026.
The government has also expanded the list of securities eligible under the Fully Accessible Route to include fresh issuances of 15-year, 30-year and 40-year government bonds, along with Sovereign Green Bonds issued in FAR-eligible tenors.
Further, three restrictions applicable to FPI investments in government securities under the General Route — the short-term investment limit, concentration limit and security-wise limit — have been removed. However, the overall investment cap of 6 per cent of outstanding Central government securities and 2 per cent of State Government Securities (SGSs) will remain unchanged.
The existing ‘general’ and ‘long-term’ sub-categories for FPI investments in government securities and SGSs will also be merged into a single category.
In another significant move, the Centre has exempted FPIs from income tax on interest income and capital gains arising from investments in government securities. The exemption will apply to income generated on or after April 1, 2026. A similar exemption has been extended to the Bank for International Settlements (BIS).
According to the Finance Ministry, the reforms are expected to broaden the investor base for Indian equities and government securities, improve liquidity in the bond market and attract long-term investors such as pension funds, insurance companies and sovereign wealth funds.
