The government has expedited the process for approving foreign direct investment (FDI) proposals requiring prior approval. It also provided a special carve-out for investors from countries sharing land borders with India, such as China, by revising the standard operating procedure (SOP) for applications involving high-priority investments for the country.

The move intends to spur capital inflows and give a fillip to the indigenisation of high-tech and new-age manufacturing.
The new SOP issued on Tuesday puts a fresh time limit of 12 weeks for deciding on FDI applications requiring government approval, while for land-border countries this period is compressed to 60 days.

India needs to boost FDI to $500 billion in three years through faster clearances and coordination, alongside targeted tax incentives and better dispute resolution to strengthen investor confidence and stability, Confederation of Indian Industry (CII) president Rajiv Memani told Prasanta Sahu. Edited excerpts.

Will the West Asia conflict lead to more severe economic impacts this financial year than the government’s February estimates, given lasting supply disruptions and high energy costs

It is difficult to assess the full impact at this stage. India entered the year with strong tailwinds—robust GDP growth, ongoing reforms, macroeconomic stability, and healthy government, bank, and corporate balance sheets. Consumption was strong, with automobile sales and IPO markets booming. After the West Asia conflict began, the government also acted swiftly, engaging industry, ensuring gas availability, protecting vulnerable groups, and coordinating closely with states.

India has identified rare earth magnets and printed circuit boards among 40 sub-sectors for expedited clearance within 60 days of foreign direct investment (FDI) proposals from China and other countries sharing land borders with the country.

As per the updated standard operating procedure (SOP) for processing FDI applications, the government has also rolled out reporting guidelines for investments in India from a company having any direct or indirect ownership by a citizen or an entity of a country sharing a land border with India.

The investor also must provide details such as shareholding pattern, beneficial owners, organisation and group structure, promoters, board composition and key managerial personnel, along with corresponding citizenship status, and details of control rights.

The government will now clear all FDI proposals within 12 weeks as per the updated standard operating procedure (SOP) for processing foreign direct investment applications.

According to the SOP, up to 12 weeks' time has been fixed for a decision on the proposals, excluding the time taken by applicants in removing deficiencies in the proposals or in supplying additional information as may be required by the competent authority.


The government's 2017 SOP had prescribed a maximum of 10 weeks for clearing the proposal.
As per the current SOP, the additional two weeks will also be given to the department for promotion of industry and internal trade (DPIIT) for consideration of those proposals which are proposed for rejection or where additional conditions are proposed to be imposed by the competent authority.

India cautiously eased FDI norms from May 1, 2026, for foreign companies with Chinese/Hong Kong shareholding of up to 10 per cent to invest in India under the automatic route.

The government, while notifying rules affirming prior government approval for Foreign Direct Investment (FDI) from countries sharing land borders with India, has kept the New Development Bank (NDB) or BRICS Bank out of this regime.

The notification by Department of Economic Affairs (DEA) making changes to the Foreign Exchange Management (Non-Debt Instruments) Rules has said, a Multilateral Bank or Fund, of which India is a member, shall not be treated as an entity of a particular country nor shall any country be treated as the beneficial owner of the investments of such Bank or Fund in India.”

Multilateral Immunity
The NDB was founded by Brazil, Russia, India, China and South Africa and all members agreed to hold 20% each in that bank. While the BRICS has taken on other members, their entry in the NDB is awaited.

The government on Saturday notified 100% FDI in insurance companies under the automatic route, an official notification read. This step will open the sector to greater foreign participation while retaining key regulatory safeguards. According to the notification, foreign investment will be subject to compliance with the Insurance Act, 1938 and companies must secure licences or approvals from the Insurance Regulatory and Development Authority of India to undertake insurance and related activities.

However, Life Insurance Corporation of India will continue under a separate framework. Foreign investment in LIC remains capped at 20% under the automatic route. “Foreign investment in LIC shall be subject to compliance with the provisions of the Life Insurance Corporation Act, 1956 (31 of 1956), and such other provisions of the Insurance Act, 1938 (4 of 1938), as are applicable to LIC as per the provisions of section 43 of the Life Insurance Corporation Act, 1956 (31 of 1956),” the notification read.

The tweaks in the rules governing Foreign Direct Investment (FDI) from countries sharing land borders with India would soon be notified by the Department of Economic Affairs (DEA) and once that is done many of the investment proposals would go without prior approval, a senior official said Thursday.

“It is under process. The DEA will have to do their internal consultations and discussions with our agencies and then they will come up with the notification.” joint secretary in Department for Promotion of Industry and Internal Trade (DPIIT) Jai Prakash Shivhare said.

On March 10 the government had announced easing the process for approval of investments from countries sharing land borders with India – China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan and Afghanistan.

Foreign direct investment into India is holding close to record levels, but the pattern within these inflows is becoming more selective. Morgan Stanley says gross foreign direct investment stands at $90.8 billion on a 12-month trailing basis as of January 2026, rising to this level from $80.3 billion in January 2025. At the same time, net foreign direct investment drops sharply to $0.5 billion, one of the lowest levels on record, due to rising profit repatriation and a surge in outward investments.

Morgan Stanley says global capital continues to enter India, but it is concentrating in a narrower set of sectors. Services, targeted manufacturing segments, and digital infrastructure are receiving the bulk of inflows, while outflows are rising across profits and overseas expansion by Indian firms.

Morgan Stanley on services sector taking largest share
Services remain the biggest recipient of foreign direct investment into India. Morgan Stanley data shows the sector accounts for 45.9% of total inflows in 2025, maintaining its lead position.

Net foreign direct investment (FDI) turned positive in February after remaining negative for six consecutive months, driven by higher gross inflows and lower repatriations, according to the Reserve Bank of India.

FDI Trends and Figures
Net FDI stood at $4.6 billion in February, compared with a negative $703 million in February 2025.

In January 2026, net FDI was negative $1.4 billion.

Repatriation in February 2026 stood at $1.7 billion, lower than $2.5 billion in the year-ago period. In January 2026, repatriation was nearly $5 billion.

Inward and Outward Flows
Gross inward FDI rose to $8.98 billion in February from $5.56 billion a year earlier.

Net outward FDI declined 31.03 per cent year-on-year (Y-o-Y) to $2.63 billion in February 2026, from $3.77 billion a year earlier.

Gross FDI inflows into India increased 18.1 per cent to $88.3 billion during April–February 2025-26, compared with $74.7 billion in the same period a year ago.

The government may hike the foreign direct investment (FDI) limit in the pension sector to up to 100 per cent and a Bill in this regard is expected in the next Parliament session, according to sources.

This would align with the insurance sector where up to 100 per cent FDI is permitted.

Last year, Parliament approved a Bill to increase the FDI limit in the insurance sector from 74 per cent to 100 per cent.

Prior amendments of the Insurance Act, 1938 was done in 2015 following which the FDI ceiling increased from 49 per cent to 74 per cent.

Singapore was the top source of foreign direct investment (FDI) equity inflows in April-December FY26 at $17.6 billion, with a 37% share of the total, data released by the Department for Promotion of Industry and Internal Trade (DPIIT) showed. The US and Mauritius were the next two sources, accounting for 16% and 10%, respectively.

The FDI from offshore tax haven Cayman Islands rose five times to $2 billion from $422 million in 2024. Another tax haven from Cyprus invested $1.4 billion in India compared to $1.2 billion in 2024 while inflows from Luxembourg rose to $545 million from $352.67 million in the same period.

India received $47.87 billion of FDI equity inflows in April-December FY26 of which $7.8 billion came from the US and $4.8 billion from Mauritius. Japan and the UAE were also among the top five investor countries.

India and Norway explored sectoral cooperation across energy, maritime, pharmaceuticals and biotech, including discussions on oil and gas, offshore technologies, renewable energy, green hydrogen, low-carbon solutions, digitization of port operations, and sustainable shipping practices, the government said Friday.

Norway, a member of the European Free Trade Association (EFTA), expressed its growing investment interest in India through Government Pension Fund Global and Norfund’s investments in renewable energy projects.

The issues were discussed during the third session of the India–Norway Dialogue on Trade and Investment on April 16.

India may allow foreign direct investment (FDI) in ecommerce inventory solely for export purposes with stringent safeguards such as separate warehouses to differentiate such stocks from those destined for the domestic market, said a government official.

India's strong economy cemented by robust macros is facing a catch 22 situation: low net foreign direct investment (FDI) inflows despite rising gross inflows. Net FDI into India contracted for a fifth straight month in January as gross inflows fell 6.9% on-year to around $5.7 billion, but the amount repatriated out of the country nearly doubled to $4.9 billion.

In a unique move to push investments into India the Japanese Foreign Ministry will create a new centre on Wednesday to assist Japanese companies looking to expand into the big market.

This Centre will assist Japanese companies to handle a variety of state-level regulations, a lack of transparency in the application of the law, and a complex tax system in India, according to persons familiar with the developments.

The new centre in the Japanese Foreign Ministry will also assist cooperation in sectors of artificial intelligence, startups and critical minerals, ET has learnt.

At the last annual Summit held in August 2025, New Delhi and Tokyo had set a goal of achieving 10 trillion yen ($62.6 billion) in private-sector investment in India over the next decade.

Japanese companies have been relatively slow in expanding into India. There were 1,434 Japanese companies here in 2024, notwithstanding the depth of political ties.

The amendment of the Press Note 3 of 2020, provides for a definition and criteria for the determination of beneficial ownership under the Prevention of Money Laundering Rules, 2005 for countries sharing land border with India (LBC), Minister of State for Commerce and Industry Jitin Prasada told Rajya Sabha.

In the current environment of global uncertainty and volatile capital flows, foreign investment remains critical for India’s growth trajectory. Both Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) play an important role in supporting capital formation, technology transfer and integration with global value chains.

Over the past decade, India has made significant progress in rationalising policies governing these flows. Today, most sectors allow up to 100% foreign ownership under the automatic route, reflecting the country’s broader effort to simplify investment frameworks and attract global capital.

However, an important shift occurred in April 2020 when the Government of India introduced the Press Note 3 (PN3) framework.

India will offer faster approvals for investments involving minority Chinese stakes across a wider range of sectors, a Reuters report said, quoting Industry Secretary Amardeep Singh Bhatia

The report stated that India has eased investment rules to support domestic manufacturing and attract foreign capital, particularly for proposals involving small Chinese shareholdings.

Under the new framework, India has scrapped the blanket government approval requirement for firms with up to 10 per cent Chinese ownership. Under the new framework, the investments in sectors such as electronics, batteries, rare-earth magnets, and processing will be cleared within 60 days, provided Indian residents retain majority control.

The government has eased norms for foreign direct investment from all countries that share land borders with India, including China, a PTI report said.

As per the report, the decision was taken at a Union Cabinet meeting chaired by Prime Minister Narendra Modi. The report added that under the new arrangements, foreign companies having shareholders from these countries required mandatory government approval for investments in India in any sector.
The report elaborated that the press note 3 of 2020 has been amended in this regard. The amendment will be applicable to countries that share land borders with India. These countries are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.

China’s FDI in India
China ranks 23rd with a 0.32 per cent share ($2.51 billion) in the total FDI equity inflows reported in India from April 2000 to December 2025.