NEW DELHI — The Union Cabinet has approved significant amendments to the Foreign Direct Investment (FDI) policy, easing restrictions for countries sharing land borders with India, including China, Pakistan, and Bangladesh.

The move revises the stringent Press Note 3 (2020) rules, aiming to boost capital inflows into startups, deep tech, and manufacturing while integrating India more deeply into global supply chains.

Key Policy Shifts:

• Automatic Route Entry: Investments where the beneficial owner from a bordering nation holds a non-controlling stake of up to 10% can now proceed via the automatic route.
• Fast-Track Approvals: A definitive 60-day timeline has been set for processing investment proposals in critical manufacturing sectors like electronics, capital goods, and solar components.
• Beneficial Ownership: The government has introduced a clear definition of "beneficial owner," aligning it with the Prevention of Money Laundering Rules (2005).
• Strategic Safeguards: In specified sectors, majority control and shareholding must remain with resident Indian citizens at all times.

Economic Impact:

The relaxation follows recommendations from the Economic Survey 2024, which highlighted the benefits of Chinese FDI in enhancing India's manufacturing capabilities. By providing a predictable regulatory environment, the government expects to accelerate domestic value addition in the electronics and renewable energy value chains.

The Committee of Secretaries, chaired by the Cabinet Secretary, will hold the authority to update the list of eligible manufacturing segments as needed.