Cabinet eases Press Note 3 rules: up to 10% non-controlling stake from land-border countries via automatic route; 60-day approval for key sectors
The Union Cabinet on 10 March 2026 amended the FDI rules for investments from countries sharing a land border with India, allowing non-controlling beneficial ownership of up to 10% under the automatic route and a 60-day decision timeline for specified manufacturing sectors.
Summary
The Union Cabinet chaired by Prime Minister Narendra Modi approved changes on 10 March 2026 to the guidelines on foreign investment from countries sharing a land border with India (LBCs). The amendment brings in a definition and criteria for 'Beneficial Owner' as used under the Prevention of Money Laundering Rules, 2005, applied at the level of the investor entity. Investors with non-controlling LBC beneficial ownership of up to 10% will be allowed under the automatic route, subject to sectoral caps and reporting to DPIIT. Proposals from LBCs in capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer manufacturing will be decided within 60 days, provided majority shareholding and control stay with resident Indians at all times; a Committee of Secretaries under the Cabinet Secretary may revise this list. The original rule, Press Note 3 (2020) dated 17 April 2020, was issued during the COVID-19 pandemic to curb opportunistic takeovers and requires all investment from LBC entities, or where the beneficial owner is from an LBC, to come only through the government route.
Key facts
- Date
- 10 March 2026, Union Cabinet
- Applies to
- Investment from countries sharing a land border with India (LBCs)
- Beneficial Owner
- Definition as per PML Rules, 2005; applied at investor-entity level
- Automatic route
- Non-controlling LBC beneficial ownership up to 10%, with reporting to DPIIT
- 60-day decisions
- Capital goods, electronic capital goods, electronic components, polysilicon, ingot-wafer
- Condition
- Majority shareholding and control with resident Indians
- Original rule
- Press Note 3 (2020), 17 April 2020 â government route for all LBC investment
Practice MCQs 5 questions
Up to what level of non-controlling beneficial ownership from land-border countries will be allowed under the automatic route after the Cabinet decision of 10 March 2026?
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Correct answer: B â 10%
Investors with non-controlling beneficial ownership from land-border countries of up to 10% will be permitted under the automatic route, with reporting to DPIIT.
Within how many days will proposals from land-border countries in specified sectors such as electronic components and polysilicon be decided, under the changes approved on 10 March 2026?
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Correct answer: C â 60 days
Proposals in capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer will be processed and decided within 60 days.
The definition of 'Beneficial Owner' adopted in the amended FDI policy for land-border countries is drawn from which rules?
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Correct answer: D â Prevention of Money Laundering Rules, 2005
The amendment uses the definition and criteria of Beneficial Ownership under the Prevention of Money Laundering Rules, 2005, applied at the investor-entity level.
Consider the following statements about Press Note 3 (2020): 1. It was issued on 17 April 2020 to curb opportunistic takeovers of Indian companies during the COVID-19 pandemic. 2. Under it, an entity of a country sharing a land border with India can invest only under the government route. Which of the above is/are correct?
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Correct answer: C â Both 1 and 2
Both are correct: PN3 (2020), dated 17 April 2020, was issued to curb opportunistic takeovers during COVID-19, and it put all investment from land-border-country entities, or where the beneficial owner is from such a country, under the government route.
Under the 10 March 2026 changes, who may revise the list of specified sectors eligible for 60-day decisions on land-border-country investment?
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Correct answer: A â A Committee of Secretaries under the Cabinet Secretary
The Committee of Secretaries under the Cabinet Secretary may revise the list of specified sectors.