FM hikes PROI equity investment limits, experts say move to improve liquidity, reduce volatility

Persons residing outside India (PROIs) will be allowed to invest more capital in equity instruments of listed Indian companies under the portfolio investment scheme, as the government moves to improve the ease of doing business, announced the Finance Minister Nirmala Sitharaman in the Union Budget. The Finance Minister proposed raising the investment cap for individual PROIs to 10% from the existing 5%. She also announced an increase in the aggregate investment limit for all individual PROIs to 24%, up from the current 10%. At present, PROIs can invest in equity instruments of Indian companies through the foreign direct investment (FDI) or foreign portfolio investment (FPI) routes. Sonam Srivastava, Founder and Fund Manager at Wright Research PMS on the impact on Stock Market post Union Budget 2026_ [Portfolio Investment Scheme] "The expansion of the Portfolio Investment Scheme for overseas individuals is a meaningful signal that India wants to deepen and diversify foreign participation beyond large institutions. By allowing Persons Resident Outside India to invest directly in equity instruments and by doubling the per-investor limit from 5% to 10%, the government is clearly trying to widen the ownership base of Indian equities while keeping systemic risks contained through an overall cap," said Sonam Srivastava, Founder and Fund Manager at Wright Research PMS. She added that from a market perspective, this matters less for immediate flows and more for structure. PROI investors tend to be long-term, often with personal or economic links to India, and their capital is typically stickier than hot money flows. "Increasing the aggregate cap from 10% to 24% meaningfully expands headroom, especially in mid- and large-cap names where foreign ownership limits often become binding constraints. Over time, this can improve liquidity, reduce volatility at the margin, and support better price discovery," said Srivastava. The announcement also aligns with a broader theme in Budget 2026 of positioning Indian equities as a core allocation in global portfolios, not just a tactical trade. If accompanied by operational clarity, simplified compliance, and stable tax treatment, this move could quietly but structurally strengthen India’s equity market depth. Tanvi Kanchan, Associate Director & Head - NRI Business, Anand Rathi said, "These increases enable foreign investors to build more substantial positions in Indian companies, which could enhance market efficiency, broaden the shareholder base, and foster stronger long-term investment in Indian capital markets." Follow our Budget live blog here