Sources indicate that the Union Cabinet, in its meeting on 10 March 2026, may have approved amendments to Press Note 3 of 2020, the policy that has, for nearly six years, subjected all foreign direct investment from countries sharing a land border with India to mandatory government approval.
If confirmed, this would represent a significant shift in India’s FDI policy architecture. Here is what practitioners and businesses should be aware of, pending the official notification.
Why Press Note 3 existed
Introduced in April 2020, Press Note 3 was a direct response to pandemic-era concerns about opportunistic acquisitions of financially stressed Indian companies. It applied to seven countries that share land borders with India: China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, and Afghanistan.
In practice, the policy functioned primarily as a gate on Chinese investment. Its introduction coincided with a deterioration in India-China relations, followed shortly by the Galwan Valley confrontation in June 2020. For Chinese investors, and technically, for any company with Chinese shareholders anywhere in its cap table, the automatic route was closed entirely.
What the amendment is reported to introduce
According to sources, the revised framework is expected to move away from a blanket approval requirement towards a tiered structure based on stake size, sector, and strategic sensitivity:
→ De minimis tier, Investments below a reported threshold of 10% stake may be eligible for the automatic route, without mandatory government or home ministry clearance.
→ Fast-track tier, Strategic sectors including solar technology, battery storage, and active pharmaceutical ingredients (APIs) are reportedly identified for expedited review, recognising India’s supply chain interests in these areas.
→ General category, Larger or more sensitive investments are expected to continue requiring case-by-case government approval, preserving oversight where national security considerations remain relevant.
What this could mean in practice
If these changes are formalised, businesses and investors that have faced lengthy approval timelines since 2020, particularly those with Chinese shareholders in their capital structure, may find a more workable path for certain transactions.
That said, several important caveats apply:
The policy nominally covers all seven land-border countries, but the security considerations that apply to Pakistan and Afghanistan are qualitatively different from those that apply to Nepal or Bhutan. How any amended rules would operate in practice for each country would depend on implementation guidance that is not yet available.
Any structural change in Chinese FDI into India is also unlikely to shift the macro trade picture. India’s trade deficit with China reportedly stood at approximately $99 billion in FY2024-25. The investment relationship has always been secondary to the trade relationship, and that asymmetry may not change materially on the basis of this policy development alone.
What businesses should watch for
Companies currently structuring transactions involving investors from land-border countries, or those with agreements that were drafted around the government-approval requirement, should monitor developments closely. The formal text of any amended Press Note, once gazetted, will be the definitive reference.
We will publish our full analysis once the official notification is available.
This post is for informational purposes only, based on media reports as of 10 March 2026. It does not constitute legal advice and should not be relied upon until the official notification is issued.
What impact do you expect this reported policy shift to have on deal activity involving Chinese capital, if confirmed? We’d welcome perspectives from those active in cross-border transactions.
India relaxes FDI norms for China and neighbouring countries — BusinessToday
Govt relaxes FDI norms for China, other countries sharing land border — Business Standard