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Informist, Tuesday, Mar. 10, 2026

 

--Cabinet amends FDI norms for countries sharing land border with India 

--Govt OKs FDI from nations sharing land border with India in critical sectors 

 

NEW DELHI – The Union Cabinet on Tuesday eased foreign direct investment norms for countries sharing land borders with India, including China, amending the provisions introduced under Press Note 3 of 2020. The change applies to seven countries--China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.

 

The Cabinet approved amending the definition of "beneficial ownership" and the criteria for determining it, and set a 60-day deadline to help companies enter into collaborations to expand manufacturing in India. According to a government release, investors from these neighbouring countries, who have a non-controlling beneficial ownership of up to 10% in any Indian business, can invest "under the automatic route" as per the caps and conditions applicable for specific sectors.

 

Under the earlier rule, companies from countries sharing a land border with India--or those with beneficial ownership in such nations--had to compulsorily seek government approval before investing in any sector in India. "The amendments in the FDI Policy aim to unlock greater FDI inflows from global funds for startups and deep techs, take forward the agenda of ease of doing business," the government said in the release.

 

The Cabinet also approved an expedited approval mechanism for investment proposals from countries sharing a land border with India in specified manufacturing sectors, including capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer. The committee of secretaries under Cabinet Secretary T.V. Somanathan may also revise the list of specified sectors.

 

The government said a 60-day decision timeline for approvals will help companies enter into joint ventures to access technologies and integrate with global supply chains. The timeline is also expected to help companies move faster on technology partnerships and expand the manufacturing sector.

 

However, the revised framework retains safeguards to ensure domestic control in sensitive sectors. In cases eligible for fast-tracked approval, the majority shareholding and control of the investee entity must remain with resident Indian citizens or entities owned and controlled by them at all times, the government said in the release.

 

The easing of FDI norms for neighbouring countries, especially China, comes at a time when New Delhi's relations with Beijing are seeing significant improvement. The Economic Survey for 2023-24 (Apr-Mar) had first pointed to the need to open the country's doors to FDI from China to boost exports. India has received FDI of just $2.5 billion from China since 2000.

 

The commerce ministry's Department for Promotion of Industry and Internal Trade is entrusted with decisions on India's FDI policy. Press Note 3 was introduced in April 2020 during the COVID-19 pandemic to prevent opportunistic acquisitions of Indian companies when asset valuations were under pressure.

 

The rule mandated that any investment from countries sharing a land border with India must receive prior government approval. It also required approval if the beneficial owner of an investment was located in such a country. According to the release, that framework was affecting investment inflows in cases where investors from land-bordering countries held only minority or non-strategic stakes, including through global private equity and venture capital funds.

The government expects the revised policy to provide clarity and improve the ease of doing business, and to facilitate investments that can contribute towards greater FDI inflows, access to new technologies, domestic value addition, expansion of domestic firms, and integration with global supply chains. "This would help in leveraging and enhancing India's competitiveness as a preferred investment and manufacturing destination," the government said in the release. "Increased FDI inflows would supplement domestic capital, support the objectives of Atmanirbhar Bharat, and accelerate overall economic growth."  End

 

US$1 = INR 91.80

 

Reported by Priyasmita Dutta

Edited by Rajeev Pai

 

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