Even after Budget 2026 hiked their limit to 10%, NRIs hold 0.6% of all NSE listed companies

TheUnion Budget 2026-27 extended limits on Non-Resident Indian (NRI) shareholding in Indian companies, even as NRIs held less than 1% of shares in all the companies listed on the National Stock Exchange (NSE) in the past three fiscal years.

As of the third quarter of fiscal 2025-26, NRIs owned just 0.62% of the shares of NSE-listed companies, according to data from Prime Database. The largest share the cohort held in the over 2600 companies in the largest index in India was just 0.64% in June quarter of fiscal 2025. The smallest share held by NRIs was 0.57% in December quarter of fiscal 2022. The share did not change despite changing quarterly returns of the Nifty 500 index in the past three years.

Further, none of the Nifty 50 ,which is the 50 most representative companies of corporate India, were in the list of 20 companies with the most NRI shareholding.

Foreign investment limit by NRIs is delineated under the Portfolio Investment Scheme which was brought in under the Foreign Exchange Management Act in 2000. The limits were fixed at 5% per NRI and 10% for all NRIs put together. Investments above 10% were allowed up to 24% with RBI approval. Under the Union Budget 2026-27 the limits were increased to 10% and 24% respectively without any approval. The change was brought-in to “ease doing business.”

While this does create opportunities for NRIs to invest, experts are more cautious. “Generally we believe it is unlikely that individual NRIs will hold 5% or 10% of a company,” said Nitin Jain, CEO and Director, Kotak Mahindra Asset Management Singapore. However the increase in the aggregate holding of NRIs upto 24% should be seen as a good move as it will provide for more headroom for aggregate participation in Indian companies by NRIs, Mr.Jain said.

The members of the diaspora are often seen being enthusiastic during Prime Minister Narendra Modi’s foreign visits. On the contrary, the data regarding their economic interest in India is in contrast to their vocal support

NRIs often maintain a strong cultural connection with India, but their investment decisions are shaped more by regulatory complexity, tax compliance requirements, and risk-adjusted returns, said Srinath Sridharan, strategic advisor to Business families and Boards.

“For many older emigrants, navigating India’s compliance environment and governance variability can appear less predictable compared to mature markets such as the US or the UK. Younger emigrants, meanwhile, frequently find more attractive dollar-denominated opportunities abroad,” Mr. Sridharan added.Further, he said that Indian equities may not always emerge as the most efficient near-term choice in an increasingly competitive global landscape where investors are constantly scanning for safer and more compelling bets across markets.

Speaking about the policy intent of such a move, Former Finance Secretary Subhash Chandra Garg said that the policy announcement was to “give feelers” to the diaspora that the Indians stock markets are more open now. Further, he said that even the government is aware that the impact of the higher ceiling is limited. “NRIs earn higher returns on their FCNR bank deposits and their property holdings in India than the stock markets,” he said. To be sure, Indian equity markets have underperformed in dollar terms in comparison with major markets in the past year.

The change comes at a time when foreign institutional investor interest in Indian equities is at a multi-decadal low, with more than ₹1.6 lakh crore worth of stocks sold by funds. The quantum of ownership, however, is not enough to compensate for foreign fund exit and domestic SIPs and retail investors largely keep the markets afloat.