India's Press Note 3 Overhaul: From Restriction To Strategic Recalibration

The Indian government recently approved a significant amendment to the country’s Foreign Direct Investment (FDI) framework, specifically targeting investments in which the ultimate beneficial ownership traces back to countries sharing a land border with India (LBCs). The formal implementing notification was issued by the Department for Promotion of Industry and Internal Trade (DPIIT) in Press Note 2 (2026 Series) on March 15, 2026 (PN2), amending the extant FDI Policy. However, the revised framework only acquires full legal force once the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (FEM NDI Rules) are amended accordingly.

The Press Note 3 of 2020 (PN3) was introduced as an emergency measure to prevent opportunistic acquisitions of Indian companies during the COVID-19 pandemic. It required prior Government approval for any investment, direct or indirect, into an Indian entity where the beneficial owner is a citizen of or situated in an LBC. However, PN3 neither