FEMA · Foreign Investment · Listed Companies
FEMA's 2026 Update: Any Foreign Individual Can Now Invest in Your Listed Shares
On 12 June 2026, the rules on who counts as an eligible individual foreign investor in Indian listed companies changed. The route is no longer limited to NRIs and OCIs, but important individual, aggregate, and land-border restrictions remain.
The rule before this change
Under India's foreign investment framework, individual investment into listed Indian equity by non-residents has traditionally run through specific, named categories: NRIs, OCIs, and Foreign Portfolio Investors registered with SEBI. A foreign individual who did not fall into one of these categories, someone who was not of Indian origin and was not investing through a registered FPI structure, did not have a straightforward individual route into listed Indian shares.
What changed on 12 June 2026
The Ministry of Finance notified the Foreign Exchange Management (Non-Debt Instruments) Third Amendment Rules, 2026. The core change: any individual resident outside India, not limited to NRIs or OCIs, can now invest in the equity instruments of a listed Indian company under this individual investor route.
This comes with two numerical limits, and both matter equally.
- Per-individual cap: no single non-resident individual investing under this route can hold 10% or more of the company's paid-up equity capital.
- Aggregate cap: across all individuals investing under this route combined, the total cannot cross 24% of the company's paid-up equity capital.
Alongside this opening, scrutiny has tightened in one specific direction. Individuals connected to land-border countries still require prior approval from the Government of India before investing, and that approval requirement has, if anything, been reinforced under the broader set of 2026 amendments to the Non-Debt Instruments framework.
In one line
The pool of individuals who can invest directly in your listed shares just got wider, but it comes with a hard per-person ceiling, a combined ceiling across all such investors, and continued extra scrutiny for anyone from a land-border country.
Why this matters for founders and listed companies
- If your company is listed, or is preparing for a listing, your potential individual investor base has widened beyond the traditional NRI and OCI pool.
- If you are in talks with a foreign family office or HNI who is not of Indian origin, this route may now be available to them in a way it was not a year ago, without requiring an FPI registration.
- Track both caps carefully. The 10% individual limit and 24% aggregate limit apply cumulatively across everyone investing under this specific route, not just to any one investor in isolation.
- If a prospective investor has any connection to a land-border country, do not assume this liberalised route applies to them without prior government approval. Confirm their status before treating the investment as routine.
Frequently asked questions
Could foreign individuals invest in Indian listed shares before this change?
Only through specific categories such as NRIs, OCIs, or as a registered Foreign Portfolio Investor. A foreign individual outside these categories generally did not have a direct individual route.
What exactly changed on 12 June 2026?
The FEMA (Non-Debt Instruments) Third Amendment Rules, 2026 allow any individual resident outside India, not just NRIs or OCIs, to invest in listed Indian equity, subject to specific caps.
Is there a limit on how much a single foreign individual can invest?
Yes. A single non-resident individual under this route cannot hold 10% or more of the company's paid-up equity capital.
How does the aggregate cap work alongside the individual cap?
The 10% cap applies to each individual investor separately. Separately, the combined holdings of all individuals investing under this specific route cannot exceed 24% of the company's total paid-up equity capital, regardless of how that 24% is distributed among them.
Does this route replace the NRI or OCI investment routes?
No. NRIs and OCIs continue to have their own established routes and conditions. This amendment widens who else, beyond those categories, can invest as an individual, alongside the existing NRI and OCI frameworks.
What does land-border country scrutiny mean in practice?
Individuals connected to countries sharing a land border with India continue to require prior approval from the Government of India before making this kind of investment, a restriction that predates this amendment and remains in force alongside the wider eligibility.
What is the precise instrument that introduced this change?
The Ministry of Finance notified the Foreign Exchange Management (Non-Debt Instruments) Third Amendment Rules, 2026, dated 12 June 2026, amending the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, which govern non-debt foreign investment into India, including investment in listed equity.
Does this amendment affect sectoral caps or approval-route restrictions?
No. Sector-specific caps and the distinction between the automatic route and the government approval route continue to apply independently of this amendment. This change concerns eligibility of the investor category itself and the caps specific to this individual investor route; it does not override sector-level restrictions a company may separately be subject to.
How should a listed company track compliance with the 24% aggregate cap?
Since the aggregate cap applies across all individuals investing under this route collectively, a company needs visibility into its shareholding pattern specifically attributable to this category of non-resident individual investors, tracked continuously rather than checked only at the time of a single transaction. Cumulative crossing of the cap can occur incrementally across multiple investors and transactions.
The takeaway
This amendment opens a door that was effectively closed for a specific type of foreign investor, while keeping the land-border scrutiny fully intact. If a listed company or a founder preparing to list is talking to foreign individual investors, it is worth checking which route they actually fall under before assuming the old NRI or OCI framework is the only option, or the only restriction, that applies.
If you need to check whether a specific foreign investor qualifies under this route, or want your shareholding pattern reviewed against the individual and aggregate caps, MOJAA can walk through it with you. Get in touch here.
This article reflects publicly available regulatory information as of September 2026 and is intended for general information only. It does not constitute legal or investment advice. Companies and investors should verify current eligibility and approval requirements directly against the FEMA (Non-Debt Instruments) Rules, 2019 and its 2026 amendments before acting on it.
Verification note: Core facts were cross-checked across three independent sources for the 12 June 2026 FEMA (Non-Debt Instruments) Third Amendment Rules. A final check directly against the notified amendment text is recommended before publishing.