Government Considers Easing FDI Paperwork for Investors with Limited Land-Border Country Ownership

The government is considering reducing paperwork for foreign investors with limited ownership links to countries that share a land border with the country. The proposal follows changes to foreign direct investment (FDI) rules introduced earlier in 2026. 

Government Considers Easing FDI Paperwork 

As per news reports, the government may simplify documentation under Press Note 2 of 2026 for companies that can invest in India without government approval. 

The revised framework, notified by the Department for Promotion of Industry and Internal Trade (DPIIT) in May, allows certain investments through the automatic route where companies based in land-bordering countries hold less than 10% non-controlling ownership in the investing entity.  

Government approval remains necessary when an investor from such a country holds a controlling stake. 

₹4,896 Crore Received Across 29 Projects 

India received ₹4,896 crore in foreign investment across 29 projects from overseas firms covered by the revised framework, according to a government statement in August. 

The changes followed the 2020 rules, which required government approval for investments involving entities based in land-bordering countries, including cases where beneficial ownership was as low as 1%. 

Government Identifies 100 Items for Import Substitution 

The government has finalised a list of 100 items for import substitution, with consultations underway to encourage their domestic manufacturing. An inter-ministerial committee reviewed the list, which covers products across multiple sectors. 

The government has also relaxed rules for inventory-based e-commerce businesses. Following the changes, several foreign entities are considering setting up inventory operations in India.  

Foreign-owned retail e-commerce businesses will need separate Indian legal entities to export Indian-manufactured products through this model. 

₹900 Crore Allocated for Startups in FY2026–27 

The government has released ₹270 crore to the Small Industries Development Bank of India (SIDBI) under the Startup India Fund of Funds 2.0 scheme.  

The initiative supports startups through government contributions to SEBI-registered alternative investment funds investing in DPIIT-recognised businesses. 

Fifteen alternative investment funds have been identified under the scheme, with ₹900 crore allocated for FY2026–27. 

Read More: India’s Overseas Investment Commitments Drop 37% in September 2026! 

Conclusion 

The proposed paperwork reduction remains under consideration. Alongside the FDI changes, the government is pursuing initiatives related to import substitution, domestic manufacturing and startup funding. 

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