Finance Minister Nirmala Sitharaman on February 1 announced several key changes for non-resident Indians (NRIs) in the Budget 2026. The proposals aim to simplify investments and ease regulatory restrictions for the NRI community.
One of the key changes include NRIs as well as other persons resident outside India (PROIs) are permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme. The government has proposed increasing the investment limit for an individual PROI from 5 per cent to 10 per cent. At the same time, the overall investment limit for all individual PROIs in a company is to be increased from 10 per cent to 24 per cent.
At this juncture, Financial Express spoke to Vidhu Duggal, practising chartered accountant at Vidhu Duggal and Company, to understand the impact of these proposed changes and what they mean for NRIs looking to invest in India.
How important is the increase from 5% to 10% for an individual NRI, and does it really change how wealthy NRIs invest in Indian shares?
It is a welcome move to increase the investment limit from 5% to 10% in Portfolio investment schemes for NRIs. This move is made to encourage investments in Indian Capital market by NRIs.
This will encourage the foreign investment inflows in India. Further, with foreign investors having withdrawn funds from the Indian markets over the past year, this measure was necessary to encourage higher investment inflows into the Indian market.
This step will not only strengthen capital inflows but is also expected to support the Indian rupee against the US dollar.
With the total NRI and PROI limit raised to 24%, are there certain sectors or mid-sized companies that may attract more NRI investment?
Yes — with the total NRI + PROI investment limit raised to 24%, emerging and high-growth sectors like Artificial Intelligence (AI) and Electric Vehicles (EV) are likely to attract increased NRI interest, especially in mid-sized companies.
For US-based NRIs, including H-1B holders, how do these higher limits affect overseas reporting requirements and the risk of double taxation?
US-based NRIs are required to disclose their Indian equity investments as foreign financial assets in their US tax returns. However, under the Double Taxation Avoidance Agreement (DTAA) between India and the United States, the risk of double taxation is mitigated. Any tax paid in India on the sale of Indian shares can generally be claimed as a Foreign Tax Credit (FTC) in the US tax return, subject to applicable rules and limitations.