Fin min eases FDI norms on countries sharing land border with India
This story was originally published at 18:21 IST on 3 May 2026
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NEW DELHI – The finance ministry amended the foreign exchange management rules on Friday, easing foreign direct investment norms for countries sharing land borders with India, including China. This will enable investors from neighbouring countries who hold non-controlling beneficial ownership of up to 10% in any Indian business to invest "under the automatic route" as per the caps and conditions applicable to specific sectors, the ministry said in a notification on Friday.
In March, the Cabinet approved amendments to Press Note 3 of 2020, issued by the Department for Promotion of Industry and Internal Trade, which tweak the definition of "beneficial ownership" and the criteria for determining it. 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.
However, a citizen of Pakistan or an entity incorporated in Pakistan shall invest only under the government route, in sectors or activities other than defence, space, atomic energy and such other sectors or activities prohibited for foreign investment, the notification said. 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. End
Reported by Sagar Sen
Edited by Saji George Titus
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