Cabinet Approves Amendments to FDI Rules for Investments from LBCs

Current Context: On March 10, 2026, Union Cabinet chaired by PM Narendra Modi approved amendments to Foreign Direct Investment (FDI) rules for countries sharing Land Borders with India (LBCs) like China, Pakistan, Bangladesh.

• Earlier Press Note 3 (PN3), 2020 mandated all LBC investments through government approval.
• Now, Beneficial Owner (BO) is clearly defined under Prevention of Money Laundering Act (PMLA) Rules, 2005.
• Non‑controlling stakes up to 10% from LBCs allowed via automatic route, with mandatory Department for Promotion of Industry and Internal Trade (DPIIT) reporting.
• Fast‑track 60‑day approvals introduced for select manufacturing sectors: capital goods, electronics/components, polysilicon/ingot‑wafer.
• Majority control must remain with Indian residents/entities.
• Aim: Balance national security with growth in startups, deep‑tech, and Atmanirbhar Bharat manufacturing.

Question:

Q.1 Under the revised FDI framework approved in March 2026, what level of non-controlling stake from Land Border Countries can now be allowed through the automatic route?
a) Up to 5%
b) Up to 10%
c) Up to 20%
d) Up to 26%

Answer: b) The amendments permit non-controlling investments up to 10% from LBCs through the automatic route, subject to reporting requirements, easing restrictions for minority investments.