In March 2026, India revised its six-year-old foreign investment control policy, relaxing
FDI thresholds for 7 land-bordering countries including China, Bangladesh, and Nepal:
investments with beneficial ownership ≤10% and no control rights will be automatically
approved without prior registration; for key manufacturing industries such as electronics
manufacturing, photovoltaics, and polysilicon, the approval time limit has been shortened
to 60 days, completely breaking the previous "one-size-fits-all" mandatory approval barrier.
This adjustment is a key measure for India to attract investment to save itself and promote
manufacturing upgrading. It not only opens a compliance window for investors from
neighboring countries but also strict control bottom lines, with a clear impact on
cross-border investment.
I. Old regulations strictly restricted, new regulations have limited relaxation
1. Old regulations (2020 PN3): All foreign investments from neighboring countries,
regardless of amount or industry, were subject to mandatory government approval,
with long cycles, low approval rates, and small investments completely blocked.
2. New regulations (2026 revision): ≤10% non-controlling investments are automatically
approved; key manufacturing sectors have fast-track approval; security reviews are
retained,and the control of invested enterprises must belong to Indian locals.
II. Impact on cross-border investment: Opportunities and risks coexist
1. Short-term benefits: Significant reduction in small investment thresholds
Simplified approval processes, greatly reduced compliance costs, and accelerated capital
turnover. Small-scale layouts such as venture capital, manufacturing supporting facilities,
and foreign trade channel participation have ushered in a compliance window, breaking
the "dare not invest" deadlock.
2. Medium and long-term changes: Reconstruction of supply chain layout
Policies are tilted towards high-end manufacturing, and India is accelerating its acceptance
of global industrial chain transfers; cross-border investment models are shifting to
small-scale shareholding, Indian-controlled, and supply chain collaboration, while
large-scale controlling investments are still subject to strict restrictions.
3. Core constraints: Risks cannot be ignored
① Investments with more than 10% shareholding and in sensitive industries still require
strict review, and proxy holding to avoid supervision is strictly prohibited;
② Geopolitical influences are significant, policies may be reversed, and stability is
insufficient;
③ Foreign investors have no operating rights and can only obtain financial returns.
III. Impact on different entities: Precise adaptation strategies
1. Venture capital/financial investors: Significant benefits, can layout in India's start-up track;
2. Manufacturing enterprises: Can layout supporting production capacity, but need to give
up controlling rights and do a good job in risk control;
3. Large strategic investors: Restrictions have not been relaxed, still need to wait for policy
liberalization;
4. Foreign trade small and micro enterprises: Low-cost binding with local channels to
achieve investment-trade linkage.
IV. Practical investment precautions
1.Strictly adhere to the 10% shareholding red line, eliminate irregular operations, and
complete post-event registration on time;
2.Prioritize layout in policy-supported manufacturing industries and avoid sensitive areas;
3.Start with small-scale investments to test the waters, and postpone large-scale long-term
capital precipitation;
4Prepare risk plans for geopolitical and policy fluctuations.
V. Conclusion
India's new FDI policy is an adjustment with limited liberalization and strict bottom-line
control. Small-scale non-controlling ownership is the core dividend, and large-scale layouts
still need to be cautious. Cross-border investment must prioritize compliance and start with
small-scale trials to steadily grasp market opportunities.
