India Eases FDI Norms for Bordering Nations, Targets Quick Investment Boost

India has relaxed foreign direct investment rules for countries with which it shares land borders, aiming to process proposals within 60 days. The changes promise to boost joint ventures and reduce import dependencies, although some strict ownership criteria may limit their applicability.

In a strategic move aimed at boosting foreign investments, the Indian government has announced a significant relaxation in foreign direct investment (FDI) norms for countries sharing land borders with India. The initiative targets quicker processing times and seeks to enhance investments in critical sectors like rare earth magnets and electronic components, officials confirmed on Wednesday.

Amardeep Singh Bhatia, Secretary of the Department for Promotion of Industry and Internal Trade (DPIIT), hailed the policy change as a catalyst for increasing FDI into the country. He emphasized that these changes will facilitate joint ventures with Indian companies, subsequently reducing import reliance and adding certainty to the investment climate.

Under the revised norms, investors with non-controlling beneficial ownership from these countries can utilize the automatic route for investments up to 10 percent, subject to sectoral caps and conditions. However, the stringent requirement that majority ownership and control must remain with resident Indian citizens may restrict broader applicability, despite the accelerated approval timeline, noted Shardul S. Shroff, Executive Chairman of Shardul Amarchand Mangaldas & Co.

(With inputs from agencies.)