NEW DELHI — In a major policy shift aimed at boosting domestic manufacturing and easing the flow of global capital, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday approved crucial amendments to India’s Foreign Direct Investment (FDI) policy regarding nations that share a land border with India.
The revised guidelines aim to streamline the approval process, clarify beneficial ownership rules, and encourage vital investments in key manufacturing sectors, all while keeping national economic safeguards intact.
Key Policy Amendments The core of the amendment addresses the bottlenecks created by previous blanket restrictions. The new policy introduces a formalized definition of a “Beneficial Owner,” closely aligned with the Prevention of Money Laundering Rules, 2005.
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The 10% Automatic Route Threshold: Investments where entities from land-bordering countries hold a non-controlling beneficial ownership of up to 10 per cent will now be permitted through the automatic route.
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Compliance & Reporting: These investments remain subject to existing sectoral caps and mandate strict disclosure and reporting to the Department for Promotion of Industry and Internal Trade (DPIIT).
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Indian Control Mandated: Crucially, the policy explicitly stipulates that the majority ownership and control of the investee company must remain with resident Indian citizens or Indian-owned entities.
Fast-Tracking Critical Sectors To prevent bureaucratic delays in high-priority industries, the Cabinet has approved a definitive 60-day timeline for processing investment proposals from land-bordering nations in specific advanced manufacturing sectors. These include:
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Capital goods and electronic capital goods
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Electronic components
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Polysilicon and ingot-wafer manufacturing (Solar)
