Countries that share land borders with India are China, Bangladesh, Afghanistan, Nepal, Myanmar, Pakistan and Bhutan.
India has eased its FDI norms, while keeping a close tab on the ownership structures of investing entities, especially from China and countries that share a land border with India.
Such entities holding up to 10 per cent non-controlling stakes under the ‘automatic route’, or without government approval, are allowed to invest, subject to sectoral caps, but receiving firms will have to report details.
Entities from such countries holding up to 10 per cent non-controlling stakes under the ‘automatic route’, or without government approval, are allowed to invest, subject to sectoral caps, but companies receiving the investment will have to report details to the industry department, according to DPIIT’s Press Note 2 (2026).
However, government approval for inbound investment will also be needed if an Indian company with existing foreign investment goes through transfer of ownership in the future and the new beneficial owner is from a land border country, including China.
‘Beneficial owner’ has also been defined as an entity that controls the investment in line with the Prevention of Money Laundering Act (PMLA).
Modifications were made in Press Note 3 (2020) introduced to prevent opportunistic takeovers of Indian companies during the pandemic. The note then said an investor from a land border country could go only through the government approval route.
The changes will come into effect from the date of the Foreign Exchange Management Act (FEMA) notification.
Fibre2Fashion News Desk (DS)
