In a bid to deepen India's financial markets and draw more global capital, Finance Minister Nirmala Sitharaman today announced three key measures: a market-making framework for corporate bonds, a new route for foreign individuals to invest in Indian equities, and higher ownership limits for such investors in listed companies.
The proposed market-making framework for corporate bonds aims to tackle one of the Indian debt market's biggest problems: poor liquidity. Under this framework, designated institutions will be encouraged or required to provide continuous buy and sell quotes in select corporate bonds, helping investors enter and exit positions more easily and at fairer prices. For savers and institutions alike, this could make corporate bonds a more attractive alternative to bank loans and fixed deposits, and in turn help companies raise money at more competitive rates.
The government also intends to allow individual persons resident outside India to invest directly in Indian equities through the Portfolio Investment Scheme. At present, most foreign portfolio flows come via registered foreign portfolio investors (FPIs) or specific non-resident Indian (NRI) routes, which can be complex for an ordinary overseas individual. By opening a regulated, standardised equity route for such investors, New Delhi hopes to broaden the base of foreign participation in Indian markets and further integrate domestic exchanges with global capital.
In a complementary move, the Finance Minister proposed raising the ceiling on how much a single person resident outside India can own in an Indian listed company, and how much all such individuals together may hold.
The individual limit is set to be increased from 5% to 10%, while the combined cap for all such investors is proposed to rise from 10% to 24%. This change would allow serious foreign individual investors to take more meaningful stakes in Indian companies, potentially improving price discovery, deepening shareholding, and supporting long-term capital formation.
Taken together, the measures signal a clear policy direction: India wants deeper, more liquid bond and equity markets that can absorb larger flows, offer better exit options to investors, and provide companies with more reliable funding channels.
