New Delhi: In a significant move aimed at bolstering foreign capital inflows and making India’s investment climate more investor-friendly, Finance Minister Nirmala Sitharaman on Sunday proposed a comprehensive review of the Foreign Exchange Management (Non-Debt Instruments) Rules as part of the Union Budget 2026-27.
The proposed overhaul, announced during her Budget speech in the Lok Sabha, is designed to modernise and streamline the regulatory framework governing foreign investments in equity, convertible securities and other ownership-linked instruments in Indian companies, according to official statements.
The current FEMA (Non-Debt Instruments) Rules, which have been amended repeatedly over the years to liberalise entry routes, sectoral caps, pricing norms and reporting requirements, will be re-examined to align with India’s evolving economic priorities, Sitharaman said.
The review is expected to usher in procedural simplification and greater regulatory clarity, addressing long-standing concerns of foreign institutional investors, private equity funds and venture capital players.
Industry insiders welcomed the move, noting that clearer and more contemporary rules could reduce compliance bottlenecks, attract fresh overseas capital and enhance India’s competitiveness as a preferred investment destination. The review could also pave the way for new flexibilities in pricing, reporting timelines and treatment of complex instruments that currently pose challenges under existing FEMA provisions.
Beyond the FEMA overhaul, Sitharaman also announced other market-friendly measures, including the introduction of a market-making framework with access to funds and derivatives on corporate bond indices and incentives to boost municipal bond issuances by larger cities.
These initiatives, she said, are part of a broader strategy to deepen capital markets and enhance access to long-term funding for infrastructure and local governments.