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Setting up

Investors from land-border countries

Investment from an entity or citizen of a country sharing a land border with India, or with such a beneficial owner, needs government approval. Press Note 2 of 2026 opened a report-first path within 10% and a 60-day fast track in listed sectors.

10%Beneficial ownership above which, or with control, approval is needed
60 daysDecision target for up to 49% in listed sectors
2 May 2026Legal effect of Press Note 2 through the FEMA rules
12 weeksStandard government-route decision target
Facts as of 1 October 20264 sources citedHow we keep this current

Who the rule covers

The land-border rule applies to investment by:

  • an entity of, or a citizen of, a country that shares a land border with India; or
  • an investor whose beneficial owner is such an entity or citizen.

For a company, a beneficial owner is a person holding more than 10%, or having control. Beneficial ownership is tested under the anti-money-laundering rules. The test looks through the investor chain, so a land-border owner anywhere in the chain can bring an investment within the rule.

Where the rule applies, the investment needs government approval even in a sector that is otherwise open on the automatic route. A later transfer of shares that brings ownership within the rule also needs approval.

What Press Note 2 of 2026 changed

Press Note 2 was issued on 15 March 2026 and took legal effect through the amendment to the FEMA (Non-debt Instruments) Rules published on 2 May 2026. It clarified the rule and partly eased it in two ways.

Within 10%: report first

Land-border beneficial ownership of 10% or less, without control, may use the automatic route. The investment must, however, be reported on the FIF/NSWS portal before the money is remitted, or before the transaction if there is no remittance.

The 60-day fast track

A land-border investor taking up to 49% in an Indian-controlled company that makes any of the following has a 60-day decision target:

  • capital goods
  • electronic components
  • polysilicon or wafers
  • advanced battery components
  • rare-earth magnets and processing

Resident Indians must keep majority ownership and control. Vehicles themselves are not on the list, so a vehicle maker with a land-border owner uses the standard government route.

SituationRouteTiming
Land-border beneficial ownership of 10% or less, no controlAutomatic, with prior report on FIF/NSWSReport before remittance
Up to 49% in an Indian-controlled company in a listed sectorGovernment route, fast track60-day decision target
Any other land-border investmentGovernment route12-week decision target, plus two weeks where rejection or conditions are proposed

Any investor with land-border ownership should apply the 2026 test before signing.

How an application runs

Applications are filed on the FIF/NSWS portal. DPIIT routes the file to the administrative ministry. The Ministry of Home Affairs comments, and the Ministry of External Affairs also comments on land-border cases. Proposals above ₹5,000 crore of foreign equity go to the Cabinet Committee. Time taken by the applicant to answer queries is excluded from the targets in DPIIT’s standard operating procedure of 4 May 2026.

Sector points

  • Telecom: land-border investors need government approval, and telecom services also need authorisation under the Telecommunications Act 2023.
  • Manufacturing and automotive: the fast-track list was designed around supply chains. Advanced battery components, electronic components and capital goods are on it; finished vehicles are not.
  • Joint ventures: the fast track works through a joint-venture structure in which the Indian partner keeps majority and control. See entry vehicles.

Check: Draft Foreign Investment Rules, intended to replace the Non-debt Instruments Rules, were open for consultation from 21 July to 31 August 2026. Confirm the land-border provisions in any final text before filing.

What to check next

  • Map every shareholder up to the ultimate owners and test each for land-border citizenship or incorporation and for control rights.
  • Where land-border ownership is 10% or less without control, file the prior report on FIF/NSWS before any money moves.
  • For a listed-sector joint venture, document that resident Indians hold majority ownership and control, and keep it that way after later funding rounds.
  • Treat share transfers with care: a sale that brings a land-border owner over 10% or into control needs approval first.
  • Build the 60-day or 12-week target, plus time for queries, into the investment timetable.

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