Govt Expands FEMA Rules: All Individuals Residing Outside India Now Eligible to Invest in Listed Indian Companies

The Department of Economic Affairs under the Ministry of Finance has introduced certain significant amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, via Notification No. S.O. 3030(E), dated June 12, 2026.

The Central Government has taken this move in exercise of its powers granted under clauses (aa) and (ab) of sub-section (2) of section 46 of the Foreign Exchange Management Act, 1999 (42 of 1999). As per the notification, the amended rules will now be called the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2026.

In the initial Foreign Exchange Management (Non-debt Instruments) Rules, 2019, in rule 9, in sub-rule (1), in place of the words “a non-resident Indian or an overseas citizen of India”, the word “an individual” has been replaced.

In the said rules, in chapter V, in place of the heading “INVESTMENT BY NON-RESIDENT INDIAN OR AN OVERSEAS CITIZEN OF INDIA”, the heading “INVESTMENT BY AN INDIVIDUAL PERSON RESIDENT OUTSIDE INDIA INCLUDING A NONRESIDENT INDIAN OR AN OVERSEAS CITIZEN OF INDIA” has been replaced.

Similarly, in rule 12, in the place of the sub-heading “Investment by NRI or OCI – A NRI or an OCI may make investments as under:- “, the sub-heading “An individual person resident outside India including a NRI or an OCI may make investments as under:-“ has been substituted.

In rule 12, for sub-rule (1), the sub-rule “(1) An individual person resident outside India may, on repatriation basis, purchase or sell equity instruments of a listed Indian company and other securities in the manner and subject to the terms and conditions as specified in Schedule III:

Provided that investment by an individual person resident outside India which results in transfer of ownership or control of the listed Indian company to entities or citizens of a country which shares land border with India or where beneficial owner of such investment is a citizen of any such country, shall require the prior approval of the Government.;

Explanation: – For the purpose of this rule,

(a) “ownership of an Indian Company” shall have the same meaning as referred under rule 23 of these rules;
(b) “beneficial owner” shall have the same meaning as assigned to it in clause (fa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003), and shall be determined as per the criteria specified under sub-rule (3) of rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, made under the said Act;” has been replaced.