The Union Cabinet has approved changes to India’s foreign direct investment (FDI) policy governing investments from countries that share a land border with India, introducing clearer rules on beneficial ownership and a defined timeline for approvals in key manufacturing sectors.

The decision, taken by the Cabinet chaired by Prime Minister Narendra Modi, seeks to provide clarity on Press Note 3 (PN3) provisions while facilitating investment flows into strategic manufacturing sectors and technology-intensive areas. According to the government statement issued on March 10, the policy changes are intended to support domestic manufacturing and improve ease of doing business.

“The amendments in the FDI Policy aim to unlock greater FDI inflows from global funds for startups and deep techs, take forward the agenda of ease of doing business,” the government statement said.

Beneficial ownership threshold introduced

A key change in the revised framework is the introduction of a definition and criteria for determining “beneficial owner”, which will now align with the definition used under the Prevention of Money Laundering Rules, 2005.