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DPIIT notifies changes in FDI norms for China

Tue, 17 March 2026

12:52

The Department for Promotion of Industry and Internal Trade (DPIIT) issued a notification easing foreign direct investment (FDI) norms while maintaining a close eye on the ownership structures of entities investing in the country, especially from China and other countries that share land border with India.

According to the Press Note 2 (2026) issued by DPIIT on March 15, the government has allowed investors from land border countries holding up to 10 per cent non-controlling stakes under 'automatic-route' or without government approval subject to sectoral caps.

However, such firms receiving the investment will have to report details to the industry department. Government approval for inbound investment will also be needed if an Indian firm with existing foreign investment goes through ownership transfer in the future and the new beneficial owner is from a land-border country, including China.

The government also defined the meaning of 'beneficial owner' -- an entity that controls the investment -- in line with the Prevention of Money Laundering Act (PMLA).The changes have been made by modifying a paragraph in the Press Note 3 (2020) that was introduced six years ago to prevent opportunistic takeovers of Indian companies during the pandemic.

According to Press Note 3, an investor from a land border country had to go only through the government approval route. Countries that share land borders with India include China, Bangladesh, Afghanistan, Nepal, Myanmar, Pakistan and Bhutan.

'The Government of India has reviewed Para 3.1.1 of the Consolidated FDI Policy Circular of 2020 dated 15.10.2020, as amended from time to time (FDI Policy) on investments from countries sharing land border with India as notified vide Press Note 3 (2020) dated 17.04.2020,' according to the Press Note 2 (2026 series).The changes will come into effect from the date of Foreign Exchange Management Act (FEMA) notification.

-- Shreya Nandi, Business Standard

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