Ø
Revised
FDI Framework Facilitates Investment with Non-Controlling Beneficial Ownership from
Land Bordering Countries
·
29 FDI
investments have been reported under the revised
framework up to 20 August
2026.
·
The
investments involve proposed FDI
of ₹4,895.65 crore.
·
Key
sectors: Information Technology, Artificial
Intelligence, Information & Communication, Manufacturing, Pharmaceuticals,
Data Centres and Transport Services, among others.
·
Investor
jurisdictions: Mauritius, the United States, Republic of Korea, Japan,
Singapore, Luxembourg and Cayman Islands.
·
Major
Reform: Prior Government approval is no longer
required where non-controlling
ownership from Land Bordering Countries (LBCs) is up to 10%.
·
Automatic
Route: Investors meeting the revised 10%
threshold can invest through the automatic
route, subject to applicable sectoral caps, entry routes and
other conditions.
·
Beneficial
Ownership Test: Under Press Note 2 of 2026, the beneficial
ownership test is now applied at the investor-entity
level.
·
Reporting
Requirement: Eligible investors can proceed without
additional Government approval after reporting
the required information to the Government.
·
Regulatory
Change: Press Note 2 of 2026 led to amendments to
the Foreign Exchange
Management (Non-debt Instruments) Rules, 2019, notified on 1 May 2026.
·
Earlier
Framework: Under Press Note 3 of 2020, even very small
beneficial ownership from LBCs required prior
Government approval.
·
Impact: The
reform is expected to reduce
transaction time, provide greater certainty to investors, facilitate FDI
inflows and improve ease of doing business in India.
[ABS News Service/22.08.2026]
A
total of 29 FDI investments have been reported under the revised framework up to
20 August 2026, involving proposed FDI of ₹4,895.65 crore. These investments
span a range of sectors, including Information Technology, Artificial Intelligence,
Information & Communication, Manufacturing, Pharmaceuticals, Data Centres and
Transport Services, among others.
The
29 investments have been reported by investors/entities based in jurisdictions including
Mauritius, the United States, the Republic of Korea, Japan, Singapore, Luxembourg
and the Cayman Islands.
The
revised framework facilitates and expedites the flow of foreign investment into
India by removing the requirement of prior Government approval in cases involving
non-controlling Land Bordering Countries (LBC) ownership of up to 10%. The reform
provides greater certainty to investors, reduces transaction time and further strengthens
the ease of doing business in India.
With
Press Note 2 of 2026 and the consequent amendment to the Foreign Exchange Management
(Non-debt Instruments) Rules, 2019, notified on 1 May 2026, the beneficial ownership
test is now applied at the level of the investor entity. Investors with non-controlling
LBC ownership of up to 10% can invest through the automatic route, subject to applicable
sectoral caps, entry routes and other conditions. The investor entity can proceed
with the investment without obtaining any other approval, after reporting the relevant
information to the Government.
Earlier,
foreign investors with beneficial ownership from LBCs of India were required to
obtain prior Government approval under Press Note 3 of 2020, even where such LBC
ownership was very small. This had been a long-standing concern among investors
seeking greater clarity and ease of investment.