Search interest around Non-Resident Indian (NRI) investments rose sharply following discussions in Parliament on the Union Budget 2026–27, with attention focused on revised investment limits in Indian listed companies. The government has outlined higher ceilings, allowing NRIs to hold up to 10% equity individually and up to 24% in aggregate in a listed Indian company, subject to applicable conditions.
Officials said the move is aimed at aligning India’s capital market framework with evolving global investment patterns while maintaining regulatory oversight. The revised limits are expected to provide greater flexibility to overseas Indian investors without altering existing safeguards under foreign exchange and securities laws.
What the Revised NRI Investment Limits Mean
Under the proposed framework, an individual NRI can now invest up to 10% of the paid-up equity capital of a listed Indian company. At the same time, total NRI holdings in a company can go up to 24%, unless the company’s shareholders approve a higher threshold as permitted under existing regulations.
These limits apply to investments made on a repatriation or non-repatriation basis, in line with rules set by the Reserve Bank of India and market regulator SEBI. Officials clarified during the Budget discussion that sector-specific caps and restrictions under foreign direct investment norms will continue to apply where relevant.
The framework also requires listed companies to maintain oversight of NRI shareholding levels to ensure the revised caps are not breached. Monitoring mechanisms through depositories and regular disclosures are expected to play a key role in compliance. Authorities indicated that the higher limits do not override existing sectoral restrictions, and investments will continue to be governed by foreign exchange rules and securities regulations already in place.
Rationale Behind the Policy Change
Government representatives indicated that the revision reflects the growing role of the Indian diaspora in domestic capital markets. Over the years, NRIs have emerged as a steady source of long-term capital, particularly in blue-chip stocks and index-linked investments.
By raising the permissible limits, policymakers aim to improve market depth and liquidity, especially in widely held companies. The change is also seen as part of broader efforts to encourage overseas participation while ensuring transparency through reporting and compliance requirements.
Officials also highlighted that NRI investments tend to be relatively stable compared with short-term portfolio flows, making them a supportive component of the equity market. The revised limits are intended to allow greater participation from overseas Indians without increasing market volatility, while retaining safeguards through existing disclosure and monitoring frameworks.
Market and Compliance Considerations
Market participants note that companies will need to closely monitor aggregate NRI shareholding to ensure compliance with the revised thresholds. Listed firms are expected to rely on depositories and registrars to track ownership levels and trigger disclosures when limits are approached.
Tax treatment for NRI investors remains unchanged under the proposal, with capital gains and dividend income continuing to be governed by existing provisions of the Income Tax Act and applicable double taxation avoidance agreements.
Companies are also expected to update internal compliance systems to align with the revised limits once formal notifications are issued. Any breach of prescribed thresholds would continue to attract regulatory scrutiny, reinforcing the need for accurate reporting. From an investor perspective, the unchanged tax framework provides continuity, allowing NRIs to assess opportunities without additional tax-related uncertainty.
Next Steps and Implementation
The revised limits are expected to come into effect following the issuance of detailed notifications and circulars by the relevant authorities. These are likely to outline operational aspects, including reporting norms and transitional arrangements.
Until formal guidelines are released, experts advise investors and companies to rely on existing rules. The heightened interest around the proposal underscores the importance of NRIs in India’s capital market ecosystem as the government seeks to balance openness with regulatory discipline.
Officials indicated that the implementation timeline will depend on coordination between the finance ministry, the Reserve Bank of India, and market regulators. Clear procedural guidance is expected to help companies and investors transition smoothly to the revised framework. Until then, adherence to current regulations remains essential, as authorities emphasise regulatory continuity alongside gradual policy reform.
Also read: Top 5 Penny Stocks Under ₹50 to Watch for Growth in February 2026
Add Economic Edge as a preferred source on Google – Click Here
Last Updated on: Tuesday, February 10, 2026 3:55 pm by Economic Edge Team | Published by: Economic Edge Team on Tuesday, February 10, 2026 3:55 pm | News Categories: Business
About The Author
