The Department for Promotion of Industry and Internal Trade (DPIIT) on March 15, 2026, issued review of FDI Policy on Investments from Countries Sharing Land Border with India.
The Government of India has amended provisions of the FDI Policy (Para 3.1.1) relating to investments from countries sharing land borders with India. As per the revised rules, entities or citizens from such countries, or investments where the beneficial owner belongs to these countries, can invest in India only through the Government approval route. In the case of Pakistan, investments are allowed only via the Government route and are prohibited in sensitive sectors such as defence, space, and atomic energy.
The amendment also mandates that any transfer of ownership—direct or indirect—resulting in beneficial ownership shifting to entities or individuals from bordering countries will require prior Government approval. The definition of “beneficial owner” is aligned with the Prevention of Money Laundering Act (PMLA) and includes situations where such entities or individuals exercise control, significant ownership, or ultimate effective control over the investing or investee entity.
Additionally, even where prior Government approval is not required, investments with direct or indirect ownership links to bordering countries will be subject to specific reporting requirements prescribed by DPIIT, along with compliance with sectoral caps and conditions. These changes will come into effect from the date of notification under FEMA.
[Press Note No. 2 (2026 Series)]
