The Reserve Bank of India has published draft Foreign Exchange Management (Foreign Investment) Rules, 2026 for public consultation, proposing a rationalized framework for foreign investment into India. The draft follows the Union Budget 2026-27 review of the Foreign Exchange Management Non-Debt Instruments Rules, 2019 and was prepared after a Central Government committee review and consultations with the government and other stakeholders. The proposed rules would move to a simplified, principle-based structure, with rationalized provisions, harmonized definitions and a clearer regulatory architecture. They also separate procedural provisions under the Foreign Exchange Management Act from policy and sector-specific requirements under the foreign direct investment policy, with the aim of improving coherence and allowing policy changes to be made more efficiently. The draft also seeks to streamline procedures, reduce compliance burdens and provide greater operational flexibility, while using investee-neutral and investor-neutral provisions that reflect evolving business practices and retain regulatory safeguards. The rules will be finalized after wider public consultation. Comments on the draft have been invited until August 31, 2026.

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