Press Note 3 Amendment: Simplified Foreign Direct Investment (FDI) from Bordering Nations

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved change in guidelines on investments from countries sharing land border with India (LBCs).

The Union cabinet has endorsed amendments to the Foreign Direct Investment (‘FDI’) policy applicable to investments originating from countries sharing a land border with India (‘LBCs’) by virtue of notification issued by press information bureau dated 10^th March 2026.

These amendments build upon the regulatory framework introduced through Press Note 3 (2020). 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

Expeditious decision in 60 days to help companies enter collaborations to expand manufacturing in India

The policy introduces expedited approval timelines i.e. within 60 days for investment proposals in certain strategic manufacturing sectors, including:

1. • Capital goods
   • Electronic capital goods
   • Electronic components
   • Polysilicon and ingot-wafer supply chains

The Cabinet Secretariat will have the authority to modify or expand this list of priority sectors where necessary.

In this case, majority shareholding and control must remain with resident Indian citizens or Indian entities owned and controlled by resident Indians.

Sriya Enterprise, – FEMA and Trade Finance Advisory firm – notes this shift helps  to relax Foreign Direct Investment (FDI) restrictions for entities from land-bordering countries (LBCs), These amendments seek to ease the strict approval process introduced in 2020 to prevent opportunistic takeovers during the pandemic, without completely removing security screenings for large, strategic investments

Incorporation of the definition and criteria for determination of ‘Beneficial Owner’ (BO) – The amendment provides for a definition and criteria for determination of Beneficial Ownership that is widely used by investing community, under the Prevention of Money Laundering Rules, 2005. The Beneficial Ownership test shall be applied at the level of the investor entity. Investors with non-controlling LBC Beneficial Ownership of up to 10 percent shall be permitted under the automatic route as per the applicable sectoral caps, entry routes, attendant conditions. Such investments shall be subject to the reporting of relevant information/details by the investee entity to DPIIT.

Background on Original Press Note 3

Issued April 17, 2020, amid India-China tensions, Press Note 3 mandated prior government approval for FDI from entities in land-bordering countries (China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan, Afghanistan, Sri Lanka—if controlled by residents there). This curbed opportunistic investments, recognizing threats to national security.

The 2026 amendment retains the “government route” for sensitive sectors but introduces faster processing and clearer eligibility.

Key Changes in 2026 Amendment

The update, effective March 2026, rationalizes the framework for efficiency:

These tweaks align with RBI’s broader FEMA liberalizations, like ECB enhancements in FEMA 3(R)(5).

Implications for Businesses

• Easier Capital Access: Chinese suppliers or Bangladeshi partners can now invest up to 10% without delays
• Investors must disclose ultimate beneficial ownership (UBO) via FIRMS portal, non-compliance risks rejection or ED probes.
• Manufacturing and renewables gain most; defense/telecom stay restricted.

Action Steps for Investors

• Verify investor origin and UBO before remitting.
• File pre-investment intimation on DPIIT’s FIRMS portal.
• Consult for structuring- Sriya Enterprise FEMA advisory

This amendment signals India’s pro-investment stance in 2026, balancing security with growth. For tailored advice serving all India, reach Sriya Enterprise

Disclaimer: Based on public notifications; consult official DPIIT/RBI sources for latest.