Because FEMA Draft FI Rules, 2026 is finally asking: “Why should only companies get the foreign money?”

Foreign investment has long been built around companies and LLPs.

The draft 2026 framework may be ready to open the door wider.

A partnership firm. A proprietorship. An AIF. A REIT. An InvIT. Today, these structures don't all sit comfortably within the traditional FDI framework.

The draft wants to change that.

It’s all expanding. It’s all flexible... for now. But FEMA Draft FI Rules, 2026 doesn’t just ask who can receive foreign money. It asks what exactly is being received.

The draft also proposes defining equity by reference to Indian accounting standards, rather than relying only on a fixed list of permitted instruments.

That could make the framework more adaptable to new financial products.

But flexibility creates another question: “If accounting treatment changes, does FEMA treatment change too?”

Then there’s more to it: equity swaps are expressly recognised, and certain gifts between individuals may move without the old percentage cap, subject to the applicable LRS limit.

More routes in. More entities eligible. More instruments potentially covered.

If the perimeter is expanding, you don’t have a “more flexibility” problem. You have a “more things to classify correctly” problem.

Before investing, ask yourself: “Is my entity eligible, is my instrument equity, and is my route actually permitted?”