Cabinet Approves Amendments to FDI Policy
- 11 Mar 2026
On 10th March 2026, the Union Cabinet chaired by Prime Minister Narendra Modi approved amendments to India’s Foreign Direct Investment (FDI) policy governing investments from countries that share a land border with India.
Key Points
- Definition of Beneficial Owner: The policy introduces a formal definition and criteria for determining “Beneficial Owner,” aligned with provisions under the Prevention of Money Laundering Rules, 2005.
- Beneficial Ownership Threshold: Investments where entities from land-bordering countries hold non-controlling beneficial ownership of up to 10% will now be permitted through the automatic route, subject to sectoral caps and compliance requirements.
- Disclosure Requirement: Such investments will require disclosure and reporting to the Department for Promotion of Industry and Internal Trade (DPIIT).
- Fast-Track Approval Timeline: The Cabinet has approved a definitive 60-day timeline for processing investment proposals from land-bordering countries in certain manufacturing sectors.
- Manufacturing Sectors Covered: The fast-track mechanism applies to sectors including capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer manufacturing.
- Ownership Safeguard: Majority ownership and control of the investee company must remain with resident Indian citizens or Indian-owned entities.
- Background – Press Note 3 (2020): The earlier rule required government approval for investments from countries sharing land borders with India to prevent opportunistic takeovers during the COVID-19 pandemic.
- Impact on Global Investment Funds: The government observed that the restrictions also affected global private equity and venture capital funds where investors from neighbouring countries held minor, non-controlling stakes.
