India Releases Draft Foreign Investment Rules: Implications For Foreign Investors

Overview

• Draft Rules: On July 21, 2026, India’s central bank (i.e., Reserve Bank of India (“RBI”)) published draft Foreign Exchange Management (Foreign Investment) Rules, 2026 (“Draft Rules”). These Draft Rules will replace the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“NDI Rules”) once notified.
• Scope: The Draft Rules cover “equity” investment in an “eligible investee entity” by any person resident outside India, and any transfer of such “equity” investment.
• IFSC Carve-out: The Draft Rules do not apply to investments in financial institutions set up in an International Financial Services Centre (e.g., GIFT City).
• Grandfathering: All actions taken under the NDI Rules before supersession will remain valid.