India has officially lifted the 10% investment cap for Saudi Arabia’s Public Investment Fund (PIF), a significant move aimed at strengthening economic ties and attracting substantial capital inflows from the Gulf nation
India Lifts 10% Cap on Saudi Arabia’s Public Investment Fund to Boost Bilateral Investments
In a strategic decision to enhance foreign investments, India has granted an exemption to Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), from its existing foreign portfolio investment rules. Previously, these rules aggregated investments from various sovereign entities and imposed a 10% cap on holdings in individual Indian companies. With this exemption, PIF’s subsidiaries can now invest independently in Indian equities, providing greater flexibility and potential for increased capital deployment
Background: Strengthening India-Saudi Economic Relations
This policy shift follows Indian Prime Minister Narendra Modi’s visit to Saudi Arabia in April 2025, during which both nations agreed to bolster investment cooperation in sectors such as energy, infrastructure, and pharmaceuticals. The two countries are also in the process of finalizing a bilateral investment treaty to further solidify their economic partnership .
Implications for Indian Markets
The exemption allows PIF’s various arms to invest separately, enhancing their flexibility in deploying capital into Indian equity markets without breaching regulatory thresholds. This move is expected to attract significant investments, particularly in key sectors like energy and infrastructure, aligning with India’s economic growth objectives .Angel One
Potential Tax Incentives
In addition to lifting the investment cap, the Indian government is reportedly considering tax relief measures for PIF to support its investments in infrastructure and energy sectors. These incentives may include a 10-year tax holiday and streamlined exemptions under Sections 10(23FE) and 80IA of the Income Tax Act, aimed at facilitating easier fund inflows .
Conclusion
India’s decision to exempt Saudi Arabia’s PIF from the 10% investment cap marks a significant step in strengthening bilateral economic ties. By providing greater investment flexibility and considering additional tax incentives, India aims to attract substantial capital inflows from Saudi Arabia, supporting its infrastructure and energy development goals.
