Press Note 3 Relaxations Attract Delayed Foreign Direct Investment

Gist In April 2020, India mandated prior government approval for foreign direct investment FDI from all countries sharing its land border to prevent opportunistic takeovers of domestic firms during the pandemic. In March 2026, the government relaxed this framework, allowing automatic-route FDI for companies where entities from these border countries hold less than a 10% stake. This pragmatic shift has successfully unblocked delayed global investments, bringing in nearly ₹4,896 crore across critical sectors like AI and pharmaceuticals, signaling a targeted easing of economic restrictions without compromising strategic security. Background Foreign Direct Investment FDI in India generally flows through two mechanisms: the Automatic Route requiring no prior approval and the Government Route requiring explicit permission from the relevant ministry . Prior to April 2020 , only entities originating from Pakistan and Bangladesh were strictly required to seek government approval before investing in India. The Union government issued Press Note 3 in April 2020 , an amendment to the FDI policy that expanded the mandatory government approval requirement to any country sharing a land border with India bringing in China, Nepal, and…