New proposals would simplify clearance procedures for investments involving up to 10% ownership from land-bordering countries, while preserving scrutiny of control, beneficial ownership and sensitive sectors.
India is preparing a further easing of its foreign investment rules for companies linked to countries that share a land border with it, including China, Pakistan, Bangladesh and Bhutan, as it seeks to remove procedural friction while keeping core security checks in place. According to the report on News18 Hindi, officials are examining ways to simplify the application process for foreign investment proposals in which investors from those countries hold up to 10% of equity.
The planned changes would build on a shift made in March, when the government relaxed the long-standing restrictions introduced under Press Note 3. Under that framework, companies with up to a 10% stake held by investors from land-bordering countries were allowed to invest without prior central government approval, provided they met other foreign direct investment conditions. Those wider conditions, including sectoral caps and entry-route rules, would still remain in force, and the Department for Promotion of Industry and Internal Trade would continue to require advance disclosure.
The move marks a cautious unwinding of tighter controls that were imposed in 2020, when any investment linked to a shareholder from a neighbouring land-border country required government clearance. Business Standard reported in March that the revised policy also sought to align the definition of beneficial ownership with the Prevention of Money Laundering Act and to create a faster approval route for selected manufacturing areas such as batteries, rare earths and electronics. The aim, according to that report, was to make the process more predictable for global investors while preserving scrutiny over control and ownership.
Further reporting from The New Indian Express and Business Standard said the government had also set a 60-day timeline for decisions on certain proposals in strategic manufacturing sectors, including advanced battery components and rare earth magnets. India Briefing noted that the relaxation applies only to minority holdings and does not amount to a blanket opening for Chinese capital, particularly where beneficial ownership or control would still raise policy concerns. In that sense, the latest move appears designed less as a broad liberalisation than as a targeted attempt to attract investment without reopening the larger national-security debate that shaped the original restrictions.
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