Bhatt Sunilkumar Narendrabhai
Press Note 3 (2020) is a critical Foreign Direct Investment (FDI) regulation in India that mandates prior government approval for all investments originating from countries that share a land border with India. Originally introduced to prevent opportunistic acquisitions of Indian companies during the pandemic, the policy was significantly amended in March 2026. [1, 2, 3]
Key Regulations
• Prior Government Approval: Any direct or indirect investment from land-bordering countries (China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan) must go through the Government Route, bypassing the Automatic Route.
• Transfer of Ownership: Any transfer of ownership of an Indian entity that results in beneficial ownership shifting to a land-bordering country also requires prior government approval. [1]
2026 Policy Amendments
In March 2026, the Union Cabinet introduced a calibrated relaxation to the strict rules to encourage capital flows into specific manufacturing sectors:
• 10% Safe Harbor: Investors from land-bordering countries with non-controlling beneficial ownership of up to 10% can invest through the automatic route, subject to sectoral caps.
• Fast-Track Timelines: Investment proposals in specific focus sectors (manufacturing in capital goods, electronic components, polysilicon, etc.) must be processed and decided within 60 days.
• Control Clause: These relaxations only apply to Indian companies where majority shareholding and control remain with resident Indian citizens. [2, 4]
For the complete official policy text and notifications, refer to the DPIIT FDI Policy Circulars .
AI responses may include mistakes.
[1] https://www.dpiit.gov.in/static/uploads/2025/07/c7586a2dee61bf88f73512a46d8a9ab1.pdf
[2] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2237806®=3&lang=2
[3] https://www.mhcolaw.com/updates/fdi-update-press-note-3-amended-government-relaxes-fdi-investments-from-china/214
[4] https://corporate.cyrilamarchandblogs.com/2026/03/from-restriction-to-recalibration-the-path-forward-for-press-note-3-and-cross-border-ma/
[5] https://carnegieendowment.org/india/research/2026/04/indias-press-note-3-gamble-opening-the-fdi-door-to-china