Headline: In a major reform, Government announces measures to deepen G-Sec market and facilitate greater Foreign Portfolio Investment (FPI) in equity segment

Extracted Data Points:

  • The Ministry of Finance has announced measures to enhance ease of investment for individual Persons Resident Outside India (PROIs) and Foreign Portfolio Investors (FPIs).
  • Individual PROIs are now permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme, which was previously available only to NRIs/OCIs.
  • The investment limit for an individual PROI under this scheme has been increased from 5% to 10% in any company.
  • The overall investment limit for all individual PROIs has been increased to 24% from the current 10%.
  • These changes are being implemented through the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026 notified by Department of Economic Affairs (DEA).
  • For FPI investment in Government securities, the list of specified securities under the Fully Accessible Route (FAR) has been expanded to include new issuances in tenors of 15, 30 and 40 years.
  • Sovereign Green Bonds (SGrBs) in the tenors of FAR-eligible securities are also now included.
  • Three restrictions for FPI investments under General Route have been removed: short-term investment limit, concentration limit, and security-wise limit.
  • The overall quantitative investment limit remains at 6% of outstanding stock of Central Government securities and 2% of State Government securities (SGSs).
  • The sub-categories of investment limits ('general' and 'long-term') have been merged into single limits for Government securities and SGSs respectively.
  • Investments by FPIs in Government Securities are exempt from income tax on any interest or capital gains effective April 1, 2026.
  • Similar income-tax exemption is provided for Bank for International Settlements (BIS) for any interest or capital gains from its investments in G-Secs.
  • These measures aim to attract stable long-term foreign capital flows including from pension funds, insurance companies, and sovereign wealth funds.