Foreign investment into India is presently governed by the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 ('NDI Rules'). The Union Budget 2026-27 announced a comprehensive review of the NDI Rules to create a more contemporary, user-friendly framework for foreign investments, consistent with India's evolving economic priorities.

Pursuant thereto, a committee was constituted by the Central Government to undertake a comprehensive review of the extant regulatory framework. Based on the recommendations of the Committee, and in consultation with the Central Government and other stakeholders, the Reserve Bank of India has prepared a draft of the rationalized Rules.

The salient features of the proposed draft Rules, inter alia, are as under:

a) Simplified and principle-based framework: Rationalization of provisions, harmonization of definitions and a simplified regulatory architecture to enhance clarity and reduce regulatory complexity.

b) Alignment with the FDI Policy: Clear demarcation of procedural FEMA provisions from policy and sector-specific requirements, improving regulatory coherence and facilitating timely policy changes.

c) Enhanced ease of doing business: Streamlined procedures, reduced compliance burden and greater operational flexibility through a transparent and investor-friendly regulatory framework.

d) Future-ready regulatory framework: Adoption of principle-based, investee-neutral and investor-neutral provisions aligned with evolving business practices, while preserving necessary regulatory safeguards.

The Rules will be finalized after wider public consultations. Accordingly, the Reserve Bank of India has today placed on its website draft Foreign Exchange Management (Foreign Investment) Rules, 2026 for comments / feedback from all stakeholders.

Comments/feedback on the draft Rules may be submitted through the respective link under the 'Connect 2 Regulate' section available on the RBI's website or may be forwarded via email by August 31, 2026, with the subject line "Feedback on Draft Foreign Investment Rules".

(Brij Raj)           
Chief General Manager

Foreign investment regulation: Draft rules propose simpler, principle-based compliance and clearer separation of procedural requirements from investment policy. Draft Foreign Exchange Management (Foreign Investment) Rules, 2026 propose a simplified, principle-based foreign investment framework. The proposals rationalise provisions, harmonise definitions, and separate procedural foreign-exchange requirements from foreign direct investment policy and sector-specific conditions. They aim to streamline procedures, reduce compliance burdens, enhance operational flexibility, and apply investor-neutral and investee-neutral provisions while preserving regulatory safeguards. The draft Rules remain subject to public consultation before finalisation.