India’s New FDI Rules for Land-Border Countries: 60-Day Approval, Beneficial Ownership Explained

India’s new FDI rules for land border countries introduce clearer beneficial ownership norms and a faster 60-day approval process, aiming to ease compliance while attracting strategic investment into key manufacturing sectors.

On March 10, 2026, the Union Cabinet approved amendments to India’s foreign direct investment (FDI) framework governing investments from countries that share a land border with the country. This revision introduces greater clarity in ownership assessment and establishes faster approval timelines for investments in selected strategic manufacturing sectors.

The policy changes are intended to streamline regulatory processes, encourage technology partnerships, and improve investment inflows, particularly for startups, deep-tech ventures, and manufacturing industries.

Introduction of a clear beneficial ownership framework

A key component of the revised policy is the formal definition and criteria for determining Beneficial Ownership (BO). The definition aligns with the framework used under the Prevention of Money Laundering Rules, 2005, which is widely recognized within the international investment community.

Under the updated rules:

• BO will be assessed at the investor entity level.
• Investments where the beneficial ownership from land-border countries remains non-controlling and up to 10 percent will be allowed under the automatic route. This will be permitted only if sectoral caps and regulatory conditions are met.
• In such cases, the investee company must disclose relevant details to the Department for Promotion of Industry and Internal Trade (DPIIT).

This provision aims to reduce compliance uncertainty for global investors while maintaining safeguards around ownership and control.

Faster FDI approval process for key manufacturing sectors

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The amended policy introduces a 60-day decision timeline for investment proposals from land-border countries in specific manufacturing sectors. These include:

• Capital goods manufacturing
• Electronic capital goods
• Electronic components
• Polysilicon and ingot-wafer production

These sectors are considered strategically important for India’s industrial and technology ecosystem. The list of eligible sectors may be periodically revised by the Committee of Secretaries (CoS) under the Cabinet Secretary.

To ensure domestic control, investments in these sectors will require that majority ownership and effective control remain with resident Indian citizens or Indian entities owned and controlled by them.

ALSO READ: How India’s FDI Rules, FTAs, and Key Sectors Shape Investment in 2026

Policy context: Press note 3 and its limitations for land-border investments

The amendments refine the restrictions introduced through Press Note 3 (2020), issued during the COVID-19 pandemic. That policy required central government approval for investments originating from countries sharing a land border with India or where the beneficial owner of the investment was located in such countries.

The measure was initially introduced to prevent opportunistic takeovers of Indian companies during the pandemic. However, its broad application also affected investments where land-border country investors held minor, non-strategic stakes, including through global private equity and venture capital funds.

The latest revision attempts to address these concerns by differentiating between controlling and non-controlling ownership structures.

Expected impact and industrial growth under India’s FDI revision

The revised framework is expected to improve regulatory certainty and facilitate quicker investment decisions. By simplifying ownership assessments and establishing defined approval timelines, the policy aims to support:

• Higher inflows of foreign capital
• Technology transfers and joint ventures
• Expansion of domestic manufacturing capacity
• Integration of Indian firms into global supply chains

The government also expects that stronger FDI participation will supplement domestic capital while enhancing India’s attractiveness as a global manufacturing and investment destination.

Rising foreign investment in India’s banking and financial sector

India’s banking and financial services sector has witnessed a notable increase in FDI activity, with several global banks and private equity firms acquiring stakes in domestic banks and non-banking financial companies (NBFCs). These investments, ranging from minority strategic stakes to majority acquisitions, reflect growing global confidence in India’s financial ecosystem and a gradual opening of the sector to international capital.

Recent transactions highlight this trend. Sumitomo Mitsui Banking Corporation invested in Yes Bank, while International Holding Company acquired control of Sammaan Capital. In another major deal, Emirates NBD secured a majority stake in RBL Bank.

Global investment firms have also been active in the sector. Warburg Pincus and Blackstone have invested in Indian financial institutions, while MUFG Bank and Bain Capital have further expanded their presence in the market.

Collectively, these deals have brought more than US$11 billion into India’s financial sector within a relatively short period.

Policy signals and regulatory shifts

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The increase in foreign investment is partly attributed to evolving regulatory signals from the Reserve Bank of India (RBI). Recent regulatory developments, including the central bank’s updated directions on foreign investment issued in 2025, alongside a more pragmatic supervisory approach toward ownership structures, have made the sector more attractive to strategic investors.

In certain instances, regulators have permitted majority or joint-control investments by foreign entities. Such approvals indicate a more flexible policy stance and suggest that international investors may increasingly consider minority stakes as an entry strategy, with the potential to deepen their operational involvement in India’s banking sector over time.

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