Overview
- Union Cabinet amendments to Press Note 3 permit investments with up to 10% non‑controlling beneficial ownership from land‑border countries through the automatic route, subject to sectoral caps and conditions.
- The policy clarifies the ‘beneficial owner’ test by aligning it with Prevention of Money Laundering rules, applies the test at the investor‑entity level, and requires investee companies to report details to DPIIT.
- Direct investors based in China, Hong Kong and other land‑border countries still need prior government approval, and majority ownership and control must remain with resident Indian citizens or Indian‑controlled entities.
- Proposals involving specified manufacturing—capital goods, electronic capital goods, electronic components, polysilicon and ingot‑wafer—will be decided within 60 days, with officials indicating additions such as advanced battery components and rare‑earth magnets; the sector list can be revised by a Committee of Secretaries.
- Officials said security and political clearances are unchanged and the changes take effect after DPIIT and the Finance Ministry issue notifications, with the move aimed at easing PE/VC flows and enabling technology partnerships and supply‑chain integration.