The central government is considering reducing documentation requirements for foreign investors that qualify for the automatic route under Press Note 2 of 2026 but have limited, non-controlling ownership linked to a country sharing a land border with India.
The contemplated change would apply to investment entities in which land-bordering-country ownership is non-controlling and does not exceed 10%. No final procedural revision or implementation date has been announced, and the proposal should therefore be treated as under consideration.
The Union Cabinet had approved revised foreign-direct-investment rules in March. Those rules permit automatic-route investment by entities based in other jurisdictions when ownership by land-bordering-country companies remains below the prescribed threshold and is non-controlling. Government approval continues to be required when such ownership is controlling.
The Department for Promotion of Industry and Internal Trade notified the revised framework in May. India subsequently received ₹4,896 crore across 29 investment projects through qualifying overseas entities, based on government figures released in August.
The framework modifies the more restrictive approach introduced through Press Note 3 of 2020. That regime required government approval for investments from neighbouring countries and for investments routed through other jurisdictions where beneficial ownership was connected to those countries. The possible paperwork reduction would concern administration of the revised automatic route rather than a fresh change to the ownership threshold itself.
