The Government of India has approved amendments to the 2020 Press Note 3 (PN 3) framework, which restricted FDI from countries sharing land borders with India. The amendments formally clarify that ‘beneficial ownership’ refers to ownership exceeding 10%, aligning with the Prevention of Money Laundering Act. Investments from such neighbouring countries resulting in 10% or less beneficial ownership and without control may now proceed under the automatic route, subject to sectoral conditions. A new 60‑day Expedited Approval Framework has also been introduced for investments in sectors such as capital goods and electronics, provided control remains with resident Indians. The changes aim to boost FDI inflows, strengthen critical manufacturing sectors, enhance supply‑chain resilience, and support start‑ups. However, clarity is still awaited on the treatment of pending applications under the old regime.
The article was authored by Ajay G. Prasad, Partner; Shivani Jain, Senior Associate; and Sapna Kataria, Associate, and was published in Lexology.
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Ajay G Prasad is a Partner at JSA Advocates & Solicitors, Bengaluru, specialising in corporate law, mergers & acquisitions, and private equity. He advises multinational corporations, private equity sponsors, and promoter groups on complex transactions across IT/ITES, real assets, manufacturing, and life sciences, with a strong focus on India entry strategies and regulatory structuring.