SEBI's 2024-26 Rewrite of How NRIs Invest in India: The 100% FPI Rule, the GIFT City Route, and What Is Actually New

In June 2024 SEBI quietly removed a rule that had capped how much an NRI could put into a GIFT City fund, and in early 2026 the government doubled the individual ceiling for NRIs buying Indian shares and raised the group ceiling more than twofold. Headlines called both "historic" and "a new era for NRI investing." Some of it is. Most of what reached a retail NRI's WhatsApp groups was noise dressed as news, and a few changes that genuinely matter were barely covered. This piece sorts the two.

The 30-second answer: Two changes matter. First, SEBI's Foreign Portfolio Investors Second Amendment Regulations, notified June 26, 2024, let NRIs, OCIs and resident individuals contribute up to 100% of the corpus of an FPI based in GIFT City IFSC, up from a single-investor cap of under 25% and a group cap of under 50%. This is a fund-structuring change, useful mainly if you invest through a GIFT City vehicle. Second, the 2026 rules raised the Portfolio Investment Scheme individual ceiling on listed Indian shares from 5% to 10% of a company's paid-up capital and the aggregate from 10% to 24%, and opened the route to all individuals resident outside India. For a retail NRI buying a few lakh of stock, neither rule changes your day-to-day. The real takeaway is structural, not transactional.

This guide is written for an NRI who already invests in India through an NRE or NRO account and a demat, and who keeps seeing "SEBI changes NRI rules" headlines without a clear read on whether to act. It assumes you know what PIS and a demat account are; if not, start with buying Indian stocks through PIS. What follows is the part the headlines skip: which of these changes touch a retail portfolio, which are for funds and family offices, and where the genuinely useful shift is hiding.

Why this looked bigger than it was

There were three separate things moving at once, on different dates, through different regulators, and the coverage blended them into one story. Untangling them is most of the work.

The first is SEBI's 100% FPI rule for GIFT City, a securities-regulation change about who can own a foreign portfolio investor vehicle registered in the IFSC. The second is the Portfolio Investment Scheme limit hike, an RBI and government change about how much of a single listed Indian company one overseas individual can hold. The third is the opening of GIFT City exchanges to retail, capped by the February 2026 launch of a platform letting Indian retail and NRIs buy global stocks directly through NSE International Exchange. Three regulators, three mechanisms, one muddled narrative.

The honest framing up front: only one of the three changes the menu for a typical retail NRI, and it is not the one that got the loudest coverage. The 100% FPI rule is real and important, but it is plumbing for fund structures. The PIS hike is real but almost never binding for retail. The GIFT City retail route is the one most NRIs can actually use, and it arrived with the least fanfare relative to its practical reach.

The 100% FPI rule: what it lets a fund do that it could not before

Before June 2024, the SEBI framework treated NRIs, OCIs and resident Indians as a suspect class inside any FPI. The logic was anti-round-tripping: stop Indian money from leaving the country, dressing up as foreign capital, and coming back with FPI tax and disclosure advantages. So the regulation capped a single such Permitted Investor at under 25% of an FPI's corpus and the whole group of them at under 50%. An NRI family that wanted to set up its own fund in GIFT City and seed it with its own money simply could not own a majority of it. That killed a lot of clean structures before they started.

The Foreign Portfolio Investors Second Amendment Regulations, 2024, notified on June 26, 2024, removed both caps for FPIs based out of an IFSC and regulated by the International Financial Services Centres Authority. NRIs, OCIs and resident individuals can now contribute up to 100% of such an FPI's corpus. An NRI can own his own GIFT City FPI outright.

SEBI did not hand this over without conditions, and the conditions tell you who the rule is really for. To use the 100% allowance, the FPI must submit to its Designated Depository Participant the PAN copies of all such Permitted Investors, identified on a look-through basis, along with their economic interest in the FPI. Where an investor has no PAN, a declaration plus an Indian passport, OCI card or Aadhaar substitutes. That look-through is the anti-round-tripping safeguard surviving in a new form: the regulator wants to see exactly who the Indian-origin money belongs to.

There is also a documentation-light alternative, and it is the more interesting one because it describes a genuine retail-style product. An IFSC FPI can skip the per-investor look-through if it is a single pooled vehicle with no side vehicles, has a common portfolio with pari passu and pro rata rights, has at least 20 investors with none holding more than 25%, invests no more than 20% of its corpus in the equity shares of a single Indian company, rectifies passive breaches within 3 months, and is managed by an independent asset management company of a SEBI-registered mutual fund sponsored by an RBI-regulated bank or its IFSC subsidiary. Read that list again and you are looking at the regulatory skeleton of a GIFT City mutual-fund-like scheme aimed at many small NRI investors, not a private family fund.

So the rule has two faces. One face lets a single wealthy NRI or family office own a bespoke FPI. The other face clears the way for diversified, many-investor GIFT City funds that an ordinary NRI can buy units in. The second face is the one that eventually reaches a retail portfolio, and it does so as a fund product, not as a do-it-yourself trading account.

Put a real situation on it. Suppose Anjali, a UK-based NRI, has Rs 60 lakh she wants invested in Indian equity through a dollar-denominated, tax-favoured GIFT City vehicle rather than directly in her own name on the NSE. Before June 2024, a GIFT City FPI that pooled mostly NRI money would have breached the under-50% group cap the moment NRIs dominated it, so such a fund was hard to launch and rarely offered to people like her. After the change, an IFSC fund manager can build a fund whose investors are overwhelmingly NRIs, register it as an FPI, and sell Anjali units. Her decision is no longer "can I access this," it is "is the fund's expense ratio and structure worth it versus simply buying the same stocks through my NRE PIS account." That is a product-selection question, which is exactly where it should sit.

The PIS limit hike: real, but it almost never binds for retail

The change that travelled furthest on social media was the increase in how much of a listed Indian company an overseas individual can hold under the Portfolio Investment Scheme. The individual ceiling rose from 5% to 10% of a company's paid-up equity capital. The aggregate ceiling, the total that all such overseas individual investors together can hold in one company, rose from 10% to 24%. And the route was widened from NRIs and OCIs to all individuals resident outside India.

This is a real liberalisation. It is also almost completely irrelevant to a retail NRI, and the gap between how it was reported and what it does is the cleanest example of news versus noise in this whole episode.

Think about what 5% of a listed company's paid-up capital actually is. For a mid-cap worth Rs 20,000 crore, the old 5% individual cap was Rs 1,000 crore of a single stock held by one person. No retail NRI was ever within three orders of magnitude of that ceiling. Doubling it to 10% changes nothing for someone buying Rs 2 lakh or Rs 20 lakh of a stock. The individual cap was only ever a constraint for promoters, founders who became NRIs, and a handful of ultra-high-net-worth holders concentrating in one name.

The aggregate cap is subtler and is the one place the change can touch retail, indirectly. The old 10% combined ceiling meant that once NRIs and OCIs together held 10% of a company, the stock went onto a "PIS ban list" and brokers stopped accepting NRI buy orders in it until someone sold. NRIs occasionally found they could not buy a popular small or micro-cap because the aggregate NRI holding had already hit the wall. Raising the aggregate to 24% makes those freezes far rarer. If you have ever had a buy order in an Indian stock rejected because of an NRI investment limit, this is the rule that fixes it. That is a genuine, if narrow, benefit, and it is the part of the PIS story worth knowing.

Here is the contrast that makes the point. Take Vikram, a US-based NRI, who tried in 2024 to buy Rs 5 lakh of a small-cap stock where NRIs already held 9.8% of the company. His broker rejected the order because the next NRI rupee would breach the 10% aggregate ceiling. He waited months for room to open. Under the 24% aggregate ceiling, that stock would not have been on the ban list at all, and his order would have gone through the same day. The lesson is precise: the PIS hike does not let you buy more of a stock, it makes it less likely you are blocked from buying a stock at all. For the vast majority of large-cap and index investing, you would never have noticed either way.

The GIFT City retail route: the change most NRIs can actually use

The development with the least regulatory drama and the most practical reach for an ordinary NRI is the steady opening of GIFT City to retail-scale investing. Two strands matter.

The first is the GIFT City fund ecosystem becoming reachable at smaller tickets. IFSCA, the GIFT City regulator, has progressively lowered minimums: the individual investor minimum for many IFSC funds dropped to around USD 75,000, down from the older USD 150,000, and open-ended fund structures can start small and scale. IFSCA also rolled out video KYC for NRIs in 2025, so the account can be opened remotely without flying to India. None of this is SEBI's 100% FPI rule, but it is the on-the-ground reason a GIFT City vehicle is now plausible for an upper-middle-class NRI rather than only for family offices.

The second strand is direct global-equity access. In February 2026, NSE International Exchange launched a platform from GIFT City letting Indian retail investors and NRIs buy US-listed stocks directly, with fractional trades from as little as USD 5 and plans to add the UK, Japan and other markets through the year. For NRIs this sits alongside, not inside, the FPI story: it is a route to global equities held in a GIFT City account rather than a new way to own Indian shares.

For an NRI the GIFT City question is therefore a wrapper question, and the answer depends on your country of residence more than on any SEBI circular. Three patterns:

If you are a UAE or Gulf NRI, GIFT City is attractive but rarely necessary for Indian equity, because the India-UAE treaty already routes your listed-share gains to be taxed only in the UAE, where there is no personal capital gains tax. You get the tax outcome without the wrapper. GIFT City earns its keep for you mainly as a dollar-denominated route to global or pooled assets.

If you are a US or Canada NRI, the calculus flips. Indian mutual funds held directly are treated as PFICs under US tax law, a punitive regime that can make ordinary Indian fund investing a tax nightmare. A correctly structured GIFT City vehicle can change how that income is characterised and is one of the few clean ways for a US-resident NRI to get pooled Indian exposure without the PFIC overlay. This is the strongest retail case for GIFT City, and it is barely mentioned in the mainstream coverage of the 100% rule.

If you are a UK NRI, GIFT City is a middle case: no PFIC problem to solve, but the dollar denomination and the ability to hold global and Indian assets in one tax-efficient account can suit someone consolidating a cross-border portfolio. For straightforward Indian equity, your NRE PIS account is still simpler and cheaper.

The deeper treatment of structures, minimums and tax is in the GIFT City investing guide for NRIs; the point here is that this strand, not the FPI ownership rule, is what changes the average NRI's option set.

The 2025 FPI tweaks that were mostly noise for retail

Several other SEBI moves in 2025 got swept into the same "NRI investing is changing" narrative and deserve to be named and set aside, because acting on them would be a waste of a retail NRI's attention.

SEBI introduced SWAGAT-FI, a fast-track onboarding lane for low-risk institutional FPIs such as sovereign wealth funds and large regulated retail funds, with registration fees paid once every ten years. This is institutional plumbing and has no bearing on an individual NRI. SEBI also tightened Offshore Derivative Instrument rules, requiring ODIs to have only non-derivative securities as underlying and to be fully hedged one-to-one; ODIs are instruments for foreign institutions that do not want to register directly, not something a retail NRI touches. And SEBI raised the granular-disclosure size threshold for large FPIs to around Rs 50,000 crore of Indian equity assets under management, a number that exists in a different universe from a personal portfolio.

On the derivatives question specifically, because it keeps coming up: the right to trade Indian index and stock derivatives is governed by your FPI category and by the separate rules for NRIs trading futures and options through the exchange. There was no 2025-26 change that suddenly hands a retail NRI new derivatives access through these FPI amendments. If your interest is F&O as an NRI, that is its own regime with its own constraints, covered in the SEBI NRI derivatives rule guide, and the FPI changes discussed here do not move it.

How the three changes sort out

Change	Date	What it actually does	Does it touch a retail NRI
100% NRI/OCI contribution in IFSC FPIs	June 26, 2024	Removes the under-25% individual and under-50% group caps for GIFT City FPIs	Indirectly, as a fund product you can buy units in, not as a trading account
PIS individual cap 5% to 10%	2026	Doubles how much of one company an overseas individual can hold	Almost never; only relevant at very large single-stock holdings
PIS aggregate cap 10% to 24%	2026	Reduces how often a stock is frozen to NRI buyers	Occasionally; fixes blocked orders in crowded small-caps
GIFT City retail access and lower minimums	2025-2026	Brings IFSC funds and global equity to smaller NRI tickets	Yes; this is the change most NRIs can use
SWAGAT-FI, ODI hedging, Rs 50,000 cr threshold	2025	Institutional FPI onboarding and disclosure plumbing	No

Edge cases

You became an NRI while holding more than 10% of a company. Founders and senior employees who emigrate sometimes hold large single-company stakes. The PIS individual cap and the FEMA rules on how a resident's holding is treated after you become non-resident interact in ways a generic "the limit went up to 10%" headline does not address. If you hold a concentrated founder or ESOP position and have changed residency, this is a position to get specific FEMA advice on, not to manage off a news summary.

Resident Indians using the GIFT City retail route. The February 2026 NSE IX platform serves resident Indians under the Liberalised Remittance Scheme, not NRIs under it. If you are an NRI, you are not constrained by the LRS USD 250,000 annual cap, because the LRS applies to residents; your GIFT City access runs through NRI-eligible routes instead. Coverage that bolts the LRS limit onto NRI access is conflating two different investor types.

The 100% rule and your existing GIFT City fund. FPIs that existed before the change had a window to align with the conditions. If you already hold units in an IFSC fund, the relevant question is whether your fund uses the look-through documentation route or the 20-investor pooled route, because that determines what it asks of you. Most retail-facing GIFT City funds use the pooled route, which keeps the paperwork off the individual investor.

RNOR and the timing of any switch. If you are in the RNOR transition window after returning to India, your residency for both tax and FEMA is shifting, and locking into a GIFT City structure or restructuring your PIS holdings during that window can create avoidable complications. Settle your residency status first; the structure decision can wait a few months and should.

The closing read

The honest read is that the loudest headline, SEBI's 100% NRI contribution rule, is the one least likely to change what you do this year, and the quietest development, GIFT City becoming reachable at retail tickets, is the one most likely to. For most retail NRIs, the practical conclusion is simple: keep doing your direct Indian equity and mutual fund investing through your NRE or NRO Portfolio Investment Scheme account, because it is cheaper and the tax is settled, and treat the PIS limit hike as a quiet bonus that mainly means fewer blocked orders in crowded small-caps rather than a reason to change strategy.

Look hard at GIFT City only if your situation fits one of two patterns: you are a US or Canada NRI for whom the PFIC treatment of Indian mutual funds is a real and expensive problem, where a properly structured IFSC vehicle is one of the few clean fixes; or you are investing larger sums and want a dollar-denominated account that holds Indian and global assets together with treaty-grade tax efficiency. The 100% FPI rule matters to you only as the thing that made those funds possible to launch, not as something you operate yourself. For a Gulf NRI, your treaty already does most of the work GIFT City would, so the case is weaker.

The exception who should get advice rather than act on this piece is the NRI with a concentrated founder or ESOP stake, anyone mid-RNOR, and anyone considering setting up their own FPI rather than buying units in someone else's. For everyone else, the correct response to this round of changes is to understand it, file it, and not let a "new era" headline talk you out of a perfectly good demat account.

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• The SEBI NRI derivatives rule, explained
• Buying Indian stocks through PIS as an NRI
• GIFT City investing for NRIs
• NRI portfolio and asset allocation
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This guide is educational and general in nature. It is not investment, tax or legal advice. SEBI, RBI and IFSCA rules in this area changed through 2024, 2025 and 2026 and several aspects remain in flux, so confirm the current position and your specific eligibility with a SEBI-registered adviser or a qualified professional before acting, particularly on GIFT City structures, concentrated holdings, or anything turning on your country of residence.