Foreign investment into India is presently governed by the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. The Union Budget 2026-27 announced a comprehensive review of the NDI Rules. Pursuant thereto, a committee was constituted by the Central Government to undertake a review of the extant regulatory framework. Based on the Committee’s recommendations, and in consultation with the Central Government and other stakeholders, the Reserve Bank of India has prepared a draft of the rationalized Rules, titled the draft Foreign Exchange Management (Foreign Investment) Rules, 2026.

The salient features of the proposed draft Rules stated in the press release include: (a) a simplified and principle-based framework involving rationalization of provisions and harmonization of definitions. (b) alignment with the FDI Policy through demarcation of procedural FEMA provisions from policy and sector-specific requirements. (c) streamlined procedures and reduced compliance burden and (d) adoption of principle-based, investee-neutral and investor-neutral provisions.

Reserve Bank of India has placed the draft Rules on its website for comments/feedback from stakeholders. Comments may be submitted through the ‘Connect 2 Regulate’ section on the RBI’s website or via email by August 31, 2026, with the subject line “Feedback on Draft Foreign Investment Rules.” The Rules will be finalized after wider public consultations. Issued by Brij Raj, Chief General Manager.