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FDI Policy Update: New Rules for Investments from Land Border Countries — What NRIs Need to Know

India's Cabinet has approved significant changes to FDI rules for countries sharing land borders with India, introducing a 10 percent beneficial ownership threshold under the automatic route and a 60-day fast-track approval timeline for strategic manufacturing sectors. These amendments aim to boost foreign investment while maintaining security safeguards, and they create new opportunities for NRI investors and fund managers looking to participate in India's manufacturing expansion.

Source: DPIIT — FDI Policy for NRIs & PIOs

FDI Policy Update: New Rules for Investments from Land Border Countries

What Changed and When

On March 10, 2026, India's Union Cabinet approved amendments to the Foreign Direct Investment (FDI) policy that govern how investments flow into India from countries sharing a land border with us. These changes represent a meaningful shift in how India balances openness to foreign capital with security and strategic considerations.

The Beneficial Ownership Test: A Clearer Framework

The government has introduced a Beneficial Ownership (BO) test that now operates at the investor entity level. This aligns with the Prevention of Money Laundering Rules, 2005, giving you a consistent framework across different regulations.

Here is what this means for you as an NRI or fund manager:

If you or your investment vehicle has non-controlling beneficial ownership of up to 10 percent in an entity incorporated in a land-border country, you can invest in India through the automatic route. This means you do not need prior government approval for most sectors, as long as you comply with:

  • Applicable sectoral caps (limits on foreign ownership in specific industries)
  • Entry route conditions (rules about how you can enter that sector)
  • Any other attendant conditions specified for that sector
The investee company (the Indian company receiving your investment) must report relevant information and details about such investments to the Department for Promotion of Industry and Internal Trade (DPIIT). This reporting requirement ensures transparency without creating delays in your investment process.

Fast-Track Approval for Strategic Manufacturing

The Cabinet has also established a 60-day decision timeline for investment proposals originating from land-border countries in four specified strategic manufacturing sectors:

1. Capital goods manufacturing 2. Electronic capital goods 3. Electronic components 4. Polysilicon and ingot-wafer production

If your investment falls into one of these sectors, you can expect a government decision within 60 days. This expedited timeline removes uncertainty and helps you plan your capital deployment more effectively.

Why This Matters for NRI Investors

These amendments serve two important purposes:

Unlocking capital for startups and deep-tech: The clearer beneficial ownership framework and faster approval timelines make it easier for global funds—including those with limited exposure to land-border countries—to invest in Indian startups and deep-tech ventures without triggering lengthy security reviews.

Advancing manufacturing expansion: The 60-day fast track for capital goods, electronics, and semiconductor-related sectors signals India's commitment to building domestic manufacturing capacity. If you hold shares in Indian companies in these sectors (such as electronics manufacturers, semiconductor assembly companies, or capital goods producers), this policy change can drive growth and valuations.

What You Need to Do

If you are considering an investment in India from a land-border country entity:

1. Verify your beneficial ownership structure. Ensure that non-controlling beneficial ownership from land-border country sources does not exceed 10 percent if you want to use the automatic route. 2. Check sectoral rules. Even with automatic route approval, you must comply with sector-specific caps and conditions (for example, defence, multi-brand retail, and insurance have their own FDI limits). 3. Ensure proper reporting. Work with your Indian investee company to ensure they report your investment details to DPIIT as required. 4. Use the fast track for strategic sectors. If your investment targets capital goods, electronics, or semiconductor manufacturing, expect a 60-day decision window and plan accordingly.

The Broader Context

These changes reflect India's evolving approach to FDI: welcoming global capital while maintaining strategic oversight. By clarifying the beneficial ownership test and introducing predictable timelines, the government removes friction from the investment process. At the same time, the reporting requirements and sectoral conditions ensure that sensitive sectors remain protected.

For NRIs and overseas fund managers, this means a more transparent, faster, and more predictable path to investing in Indian growth stories—especially in the manufacturing and technology sectors where India is building competitive advantage.

Where to Get More Information

For the complete policy text and sector-specific conditions, visit the Department for Promotion of Industry and Internal Trade (DPIIT) portal at dpiit.gov.in or check the Press Information Bureau (pib.gov.in) for official circulars and FAQs. Your investment advisor or chartered accountant can help you assess whether your specific investment structure qualifies for the automatic route and what reporting obligations apply.