Budget 2026 positions diaspora capital as a growth lever, not just a remittance stream

In FY25, India received about $135 billion in foreign remittances, nearly 3.5% of GDP, making it the world’s largest recipient. While these flows provide critical consumption support, budget 2026 signals a clear intent to channel overseas Indian savings more directly into productive capital formation. A key step is the decision to deepen diaspora participation in equity markets. The budget doubles the individual investment limit under the Portfolio Investment Scheme from 5% to 10% and raises the aggregate cap to 24%. The move aims to broaden the shareholder base and attract more stable, long-term capital—typically less volatile than institutional flows, an important consideration amid heightened global uncertainty. Beyond equities, the Budget also simplifies real estate transactions involving non-residents. By removing the mandatory tax deduction and collection account number (TAN) requirement for resident buyers purchasing property from non-resident Indians and shifting to a PAN-based TDS challan system, it reduces a significant administrative friction that had deterred transparent asset monetization. By lowering regulatory and tax barriers, the budget signals an intent to institutionalize diaspora participation. If implemented effectively, these flows can complement remittances by strengthening balance sheets, funding enterprise creation and supporting growth, while also helping stabilise capital flows and the currency in a volatile external environment. Ashok Wadhwa is the Group CEO of Ambit and a veteran investment banker with decades of experience in India’s capital markets.