SynopsisIn an exciting development, India has relaxed its investment rules, making it more convenient for foreign investors to dive into its dynamic stock market. The latest regulations expand opportunities via the portfolio investment scheme, designed to lure capital inflows and support the stability of the Indian rupee.TIMESOFINDIA.COMThe government has notified its decision to make it easier for residents outside the country, including foreigners and overseas entities, to invest in listed Indian stocks, by amending the Foreign Exchange Management Act rules.It has permitted persons resident outside India (PROIs) to invest through the portfolio investment scheme that was earlier extended only to non-resident Indians and overseas citizens of India, as per a notification by the Department of Economic Affairs (DEA).The Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2026, take immediate effect, it said.Also Read: India attracted $843 billion in FDI between 2014-15 and 2025-26: OfficialThe decision was part of a raft of steps announced by the government on June 5 to reverse capital outflows and prop up a weakening rupee amid the West Asia war. The rupee closed at 95.08 against the dollar on Friday, gaining from 95.74 on June 4.As per the notification, an individual PROI can now invest up to 10% in any company under the scheme, against 5% earlier, with an overall investment cap for all these individuals lifted to 24% from 10%.It provided that an individual PROI investment resulting in the transfer of ownership or control of the listed company to entities or citizens of a country which shares land border with India--or where the beneficial owner of the investment is a citizen of any such nation--will require the prior government approval. This is in sync with the government’s foreign direct investment (FDI) policy.“The decision seems to be taken with an eye on encouraging foreign investment into India-- both FDI and FPI-- at a time when there is a flight of capital,” said Mayank Arora, associate partner (Regulatory) at Nangia Global.Also Read: Corporate India’s overseas FDI commitments halve in MayConditions applyThe notification says investment made by an individual PROI in breach of the prescribed limit of less than 10% will be required to be divested within five trading days from the date of settlement causing the breach.The individual PROI investment above the prescribed limit of less than 10% in a company will have to be divested within five trading days of the breach, as per the notification.If the PROI chooses not to divest the excess holding, then the entire investment will be considered as FDI, and the individual won’t make further portfolio investment in that company.The PROI, through the designated branch of the Authorized Dealer, will bring the breach to the notice of the depositories and the company concerned within seven trading days from the settlement date.The divestment of holdings by such individuals and the reclassification of foreign portfolio investment as FDI will be guided by conditions specified by Securities and Exchange Board of India and the Reserve Bank. (Join our ETNRI WhatsApp channel for all the latest updates)...moreElevate your knowledge and leadership skills at a cost cheaper than your daily tea.Subscribe Now