01 Read
What happened
The RBI released draft rules to simplify the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, following Finance Minister Nirmala Sitharaman's Union Budget 2026-27 announcement for a comprehensive review. Key features include a principle-based framework, FDI policy alignment, and overseas listing provisions for Indian public companies. Equity must be INR-denominated and held in dematerialised form. NRIs and OCIs may now subscribe to NPS with repatriable annuity. Public comments are invited until August 31.
02 Understand
Why it matters
The Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (NDI Rules) govern all foreign equity investment into India — FDI, portfolio investment by NRIs/OCIs, and downstream investment. Over time, the rules accumulated complexity through multiple amendments, creating compliance friction for investors and companies. The RBI's draft represents a structural overhaul rather than incremental changes.
The most significant reform is enabling Indian public companies to list equity directly on international stock exchanges — a long-pending demand from the startup ecosystem and established conglomerates alike. The framework requires INR denomination in the company's books and dematerialised holding, ensuring regulatory traceability. For companies already listed in India, SEBI regulations apply and parity (pari passu rights) with domestic shareholders is mandatory.
For unlisted companies pursuing only an overseas listing, the Ministry of Corporate Affairs prescribes conditions, and pricing must follow a book-building process at the concerned international exchange — reducing scope for undervaluation or related-party pricing games.
The NPS access for NRIs/OCIs with full repatriation of annuity/accumulated savings is a targeted measure for the diaspora, addressing a longstanding gap in retirement planning for Indians abroad. The broader objective — principle-based, future-ready architecture — signals a shift from prescriptive rule-sets to outcome-focused regulation, consistent with global best practices like the UK's Senior Managers Regime or EU's AIFMD framework.
The most significant reform is enabling Indian public companies to list equity directly on international stock exchanges — a long-pending demand from the startup ecosystem and established conglomerates alike. The framework requires INR denomination in the company's books and dematerialised holding, ensuring regulatory traceability. For companies already listed in India, SEBI regulations apply and parity (pari passu rights) with domestic shareholders is mandatory.
For unlisted companies pursuing only an overseas listing, the Ministry of Corporate Affairs prescribes conditions, and pricing must follow a book-building process at the concerned international exchange — reducing scope for undervaluation or related-party pricing games.
The NPS access for NRIs/OCIs with full repatriation of annuity/accumulated savings is a targeted measure for the diaspora, addressing a longstanding gap in retirement planning for Indians abroad. The broader objective — principle-based, future-ready architecture — signals a shift from prescriptive rule-sets to outcome-focused regulation, consistent with global best practices like the UK's Senior Managers Regime or EU's AIFMD framework.
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