- Cabinet eased FDI norms for countries sharing land borders with India up to 10% non-controlling stake
- Investments under 10% from these countries now allowed automatic approval without prior government consent
- Countries affected include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan
The Cabinet on Tuesday eased norms for foreign direct investment from all countries that share land borders with India, according to a PIB release. After the new changes investments from land-bordering countries up to 10% non-controlling stake will come under the automatic route without prior approval.
The cabinet has made amends in the Press Note 3 framework governing FDI from land-bordering countries. The decision was taken in a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi.
Countries that share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.
Under this press note, foreign companies having shareholders from these countries required mandatory government approval for investments in India in any sector. However, after the revision 10% non-controlling investment from these countries may get automatic approval.
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The move is aimed at reducing compliance burden and speeding up investment approvals. The changes are expected to support technology access, manufacturing expansion and integration with global supply chains. This would help in leveraging and enhancing India's competitiveness as a preferred investment and manufacturing destination. Increased FDI inflows would supplement domestic capital, support the objectives of Atmanirbhar Bharat, and accelerate overall economic growth.
In addition the government introduced clear definition of ‘Beneficial Owner' aligned with provisions under the Prevention of Money Laundering Rules, 2003.
Beneficial ownership test will be applied at the level of the investor entity, it added. However, it clarified that majority ownership and control of investee entities to remain with resident Indian citizens or Indian-owned entities
Cabinet also clears 60-day timeline for approval of investments from land-bordering countries in specified sectors like manufacturing in capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer.
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