Key takeaways
- Since 12 June 2026, any individual living outside India can buy listed Indian shares directly — no FPI registration.
- Each individual must stay below 10% of a company; all such individuals together below 24%.
- SWAGAT-FI (from 1 June 2026) eases registration for low-risk foreign investors.
The three routes
| Route | For | How |
|---|---|---|
| Direct route for individuals (new, June 2026) | Any individual resident outside India — foreign nationals, NRIs, OCIs | Indian broker and demat account with a designated bank account; holding must stay below 10% of a company (24% for all such individuals together) |
| Foreign portfolio investor (FPI) | Funds, family offices, companies — and individuals who prefer it | Register with SEBI through a designated custodian (individuals as Category II FPIs) |
| GIFT City (IFSC) funds | Foreign investors who prefer a fund | Invest in a fund set up in GIFT City that invests in India — see investing through GIFT City |
Exceed 10% in a company and the excess must be sold within 5 trading days, or the whole holding is treated as FDI. Investors with beneficial owners in a country bordering India need government approval where ownership or control could pass to them.
Indirect exposure — India ETFs and ADRs listed abroad — needs no Indian registration at all.
What changed in 2026
- FEMA (Non-Debt Instruments) Third Amendment Rules, 2026 (notified 12 June 2026): the listed-equity route that was open only to NRIs and OCIs now covers any individual resident outside India.
- SWAGAT-FI (SEBI circulars of January 2026, effective 1 June 2026): faster single-window registration and longer validity for low-risk FPIs such as government funds, regulated retail funds, insurers and pension funds.
- NRIs, OCIs and resident Indians can contribute up to 100% of an IFSC-based FPI (in place since 2024).
Tax on gains
- Listed equity: long-term gains (held over 12 months) 12.5% above ₹1.25 lakh; short-term 20% — treaty relief may apply.
- Dividends are taxed in India, with treaty rates available — see dividend withholding by country.
- FPIs need a PAN and usually a local tax representative.
Sources
- India Briefing — FEMA non-debt amendment for foreign individuals (2026)
- Taxscan — FEMA NDI rules opened to all individuals resident outside India
- SEBI — SWAGAT-FI circular (Jan 2026)
Frequently asked questions
Can a foreigner invest in the Indian stock market?
Yes. Since 12 June 2026 any individual resident outside India can buy listed Indian shares directly through an Indian broker and demat account, without FPI registration, as long as each holding stays below 10% of the company. Funds and companies use FPI registration or GIFT City funds.
Can a US citizen buy Indian stocks directly?
Yes, since the FEMA amendment of 12 June 2026, through an Indian broker and demat account with a designated bank account, subject to the below-10% per-company limit — though some Indian brokers restrict US residents, so check before opening an account.
Can a foreign individual register as an FPI in India?
Yes. Individuals can register as Category II FPIs with SEBI through a designated custodian, subject to KYC requirements.
What is SWAGAT-FI?
A SEBI framework effective 1 June 2026 that gives low-risk foreign investors — such as government funds, regulated retail funds, insurers and pension funds — single-window registration with longer validity.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.