India’s Finance Ministry on 13 June 2026 notified the Foreign Exchange Management (Non-Debt Instruments) Third Amendment Rules, substantially widening who can invest in Indian start-ups and unlisted companies from abroad. Previously, only Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) enjoyed the relatively simple ‘overseas investment’ route; the new rules open the door to any individual resident outside India, subject to enhanced security checks for entities from countries sharing a land border with India. Key changes include: (1) raising the aggregate investment cap for individual investors from US $250,000 to US $500,000 per financial year under the Liberalised Remittance Scheme when funds are channelled into start-ups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT); (2) automatic approval for rights issues as long as the investor’s shareholding does not exceed 10 %; and (3) mandatory KYC attestation by an Indian bank for investors from ‘sensitive’ jurisdictions, a provision clearly aimed at addressing geopolitical concerns with China and Myanmar. For global mobility stakeholders, the rule change matters because many inbound assignees and returning Indian expatriates prefer holding equity in Indian subsidiaries rather than drawing higher salaries. HR leaders will now have a bigger toolbox to design share-based retention plans for foreign hires while staying within the Reserve Bank of India’s exchange-control regime. Legal advisers caution that the Income-tax Department has not yet clarified whether the enhanced investment ceiling will attract additional withholding tax. Companies should also note that any investment beyond ₹75 crore in sectors such as telecoms and defence still requires clearance from the Ministry of Home Affairs. Overall, the amendment signals India’s intent to court global angel investors and foreign employees—even those without Indian roots—by easing capital mobility, complementing the ongoing liberalisation of work-visa categories for high-skilled professionals.
Source: CA Club India
