The central government on Friday announced a series of measures aimed at attracting foreign investments, 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 with effect 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 ease of doing business in 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.
The measures are aimed at improving ease of investment for individual Persons Resident Outside India (PROIs) and FPIs, while attracting stable long-term foreign capital flows.
The government has also increased the investment limit for an individual PROI under the scheme from 5% to 10% in any company, while the overall investment limit for all individual PROIs has been raised from the existing 10% to 24%. The changes were formally notified on Friday.
As part of the liberalisation announced in Union Budget 2026-27, individual PROIs will now be permitted 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 a more proactive mobilisation of foreign portfolio capital by leveraging the existing onboarding systems already in place for NRI/OCI investors. Simplified onboarding and reduced compliance requirements would further enhance ease of doing business, while attracting a broader base of relatively stable individual foreign investors. This 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 investments in government securities. It removed the short-term investment limit, concentration limit and security-wise limit for FPI investments in government securities under the general route, while retaining the overall quantitative investment cap of 6% of the outstanding stock of central government securities and 2% of state government securities.
“These measures will help in development of a smooth yield curve, and attract stable systematic inflow 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 foreign exchange inflows for the country,” the ministry said.
In another major step, the government announced tax exemptions for foreign investors in government securities to encourage long-term capital inflows from pension funds, insurance firms and sovereign wealth funds.
Recognising the importance of a competitive tax regime in attracting global capital, the government said investments by FPIs in government securities will be exempt from income tax on both interest income and capital gains.
“This step will align the taxation on G-Secs with many comparable jurisdictions,” the ministry said.
The exemption will apply from April 1, 2026, to any interest or capital gains arising to FPIs on or after that date in respect of investments in government securities. Similar income-tax exemptions have also been extended to the Bank for International Settlements (BIS) for income arising from investments in government securities.
“Taken together, these reforms aim to reduce operational complexities, simplify market access, and provide a more seamless investment experience comparable with leading international financial markets,” the finance ministry said.
The ministry added that the measures are expected to widen the investor base for Indian equities and government securities, while encouraging greater participation from global investors seeking exposure to one of the world’s fastest-growing major economies.
