India Says No Change in FDI Policy for Border Sharing Nations

The Indian government has clarified that there has been no amendment to its foreign direct investment (FDI) policy concerning countries that share land borders with India. This includes China, Pakistan, Bangladesh, Bhutan, Nepal, Myanmar, and Afghanistan.

India’s Press Note 3 Still in Effect

The current policy, introduced through Press Note 3 in April 2020, remains unchanged. Under this regulation, any investor from a country sharing a land border with India must seek prior government approval before investing in any Indian sector. This framework applies uniformly to all seven neighbouring countries.

Standard Review Process 

All FDI proposals from these countries go through the same evaluation process, following a defined standard operating procedure. An inter-ministerial committee headed by the Union Home Secretary handles the review of these applications. The panel assesses the proposals on multiple fronts, including economic and strategic factors.

Clarification Amid Reports

The clarification comes amid reports that suggested a possible streamlining of the approval process for FDI applications from China. However, government sources have confirmed that no preferential changes or separate pathways have been created for any specific country. The scrutiny mechanism remains consistent across all land-bordering nations.

Read more: FDI Rule Eased: Govt Allows Bonus Shares to Existing Foreign Investors in Prohibited Sectors.

Automatic Route

While the rule for mandatory approval applies to bordering nations, the broader FDI framework for other countries continues under the automatic route. A large share of India’s FDI inflows does not require prior government approval and is processed automatically as per sector-specific caps and conditions.

Conclusion

There has been no revision to the 2020 Press Note 3 regulation. All investment proposals from land-bordering countries continue to follow the same government approval requirement, with no changes in review criteria or policy structure. The process and conditions remain as originally notified by the government.

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