Union Cabinet approves 60-day timeline for FDI approvals from Land Bordering Countries in critical manufacturing sectors.

Key facts

• Union Cabinet chaired by Prime Minister Narendra Modi amended FDI guidelines for countries sharing land border with India (LBCs).
• Beneficial Ownership (BO) definition now aligns with Prevention of Money Laundering Rules 2005 and applies at investor entity level.
• Non-controlling LBC Beneficial Ownership up to 10 percent allowed under automatic route subject to DPIIT reporting.
• LBC investment proposals in capital goods, electronic components, polysilicon and ingot-wafer manufacturing to be decided within 60 days.
• Cabinet Secretary’s Committee may revise the list of specified manufacturing sectors eligible for expedited clearance.
• Majority shareholding and control of investee entity must remain with resident Indian citizen(s) and/or resident Indian entity(ies) owned and controlled by resident Indian citizen(s) at all times.
• Changes stem from Press Note 3 (PN3) dated 17 April 2020 that mandated government route for LBC investments to curb opportunistic takeovers during COVID-19 pandemic.