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Nearly six years after India erected a formidable regulatory wall to shield its domestic companies from opportunistic foreign acquisitions during the COVID-19 pandemic, the Government of India has initiated a strategic recalibration. On March 15, 2026, the Department for Promotion of Industry and In
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FAQ :
Press Note 2 (2026) shifts India's approach from a blanket restriction to a nuanced, threshold-based framework for FDI from LBCs, requiring prior government approval only under specific conditions.
The definition of 'Beneficial Owner' is now linked to the Prevention of Money Laundering Act (PMLA), establishing a 10% materiality threshold. Investments with non-controlling beneficial ownership up to 10% can use the automatic route.
Removing the phrase 'situated in' means investments are scrutinized only if the beneficial owner 'is a citizen of' an LBC. This provides significant relief for expatriates, NRIs, and third-country nationals working or residing in neighboring jurisdictions.
Yes, while minority investments below 10% are eased, the policy introduces a dual test for 'ultimate effective control.' If an LBC citizen or entity can exercise control over the investor or investee company, the automatic route is voided.
Yes, investments requiring government approval for specific capital-intensive manufacturing sectors (like capital goods, electronics, and polysilicon) will be processed within 60 days, provided Indian citizens/entities retain majority shareholding and control.
For minority, non-controlling investments under the automatic route, Indian investee companies must report relevant details to the DPIIT via a prescribed Standard Operating Procedure (SOP) for post-investment surveillance.
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