Countering FPI outflows: RBI looks to double investment limit for foreign individuals, says report – The Times of India

India intends to lengthen privileges beforehand unique to abroad Indians to all foreign traders. (AI picture)

The Reserve Financial institution of India (RBI) plans to elevate the investment limit for particular person foreign traders in listed firms to 10% from 5%, aiming to improve capital inflows, in accordance to senior authorities officers and paperwork seen by Reuters.
Foreign portfolio traders (FPIs) have withdrawn over $28 billion from Indian equities for the reason that NSE Nifty 50 reached its peak in September, influenced by weak earnings, elevated valuations and potential US tariff considerations.
India intends to lengthen privileges beforehand unique to abroad Indians to all foreign traders, while growing investment thresholds, as confirmed by the officers.
RBI communicated to the federal government by way of a letter final week, stating “It’s felt that these proposals could also be applied as early as doable,” citing considerations about disrupted capital flows in latest exterior sector developments.
Additionally Learn | In 7 charts: How India’s GDP has doubled from $2.1 trillion to $4.2 trillion in simply 10 years
In accordance to the doc, the brand new framework would allow all foreign particular person traders to maintain up to 10% in a listed firm.
This is a rise from the present 5% limit allowed to abroad Indian residents beneath the Foreign Alternate Administration Act (FEMA) particular provisions.
“The present foreign change rules particularly handle non-resident Indians (NRIs) and abroad residents of India (OCIs) beneath Schedule III,” defined the second authorities official, who requested anonymity.
“The scope is being expanded to embody all particular person foreign traders.”
RBI plans to improve the combination investment ceiling for all abroad particular person traders in an Indian listed firm to 24%, up from the present 10%, in accordance to the officers.
Additionally Learn | ‘Worst is probably going behind us…’: Goldman Sachs sees 6.4% GDP development for India; warns of market volatility
The officers confirmed that discussions concerning the rise in foreign investor limits for Indian listed firms are nearing completion, with ultimate deliberations ongoing between the federal government, the RBI, and SEBI.
The RBI and authorities help the initiative, however SEBI has highlighted difficulties in monitoring adherence to abroad investment restrictions.
SEBI has expressed concern that when a foreign investor’s 10% stake is taken into account alongside associates’ holdings, the entire might surpass 34%, necessitating takeover rules.
“With out efficient monitoring throughout completely different frameworks, such takeovers might go undetected,” SEBI cautioned the RBI in a letter final month.
Additionally Learn | Indian inventory markets reverse 2025 losses! Bulls occasion as foreign traders return to D-Avenue – however is the rally sustainable?
In accordance to Indian rules, any investor buying past 25% possession should lengthen an open provide to retail shareholders.
The authorities and regulatory our bodies are presently evaluating these points prior to implementing the reforms.
“We’re working to rationalise the principles to forestall the chance of such arbitrage throughout rules by the foreign traders,” the second official mentioned.