Reforms aiming investment from Persons Resident Outside India (PROIs)

Why in News?

The Government of India has notified the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026, enabling wider participation of Persons Resident Outside India (PROIs) in Indian equity markets.

Key Announcement

• In the Union Budget FY 2026–27, the Union Finance Minister announced that individual PROIs would be allowed to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme (PIS).
• Earlier, this facility was available only to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs).

Changes Introduced

• The investment limit for an individual PROI under the Portfolio Investment Scheme has been increased:
  • From 5% to 10% of the paid-up equity capital of any listed Indian company.
• The aggregate investment ceiling for all individual PROIs has been increased:
  • From 10% to 24% of a company’s paid-up equity capital.

What is a Person Resident Outside India (PROI)?

Under the Foreign Exchange Management Act (FEMA), a PROI is a person who:

• Stays in India for less than 182 days during the preceding financial year; or
• Leaves India for employment, business, or any purpose indicating an intention to stay abroad for an uncertain period.

Who Comes Under PROI?

The category includes:

• Non-Resident Indian (NRI)
• Overseas Citizen of India (OCI)
• Foreign nationals
• Foreign entities and institutions

Important: PROI status is determined by residency, not citizenship. Therefore, a PROI may be either an Indian citizen living abroad or a foreign citizen.

What is the Portfolio Investment Scheme (PIS)?

• PIS is a framework that allows eligible non-residents to invest in shares and convertible debentures of Indian listed companies through authorized channels.
• Investments are subject to prescribed limits to ensure orderly participation in Indian capital markets.

Sources: PIB & ET