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.
Shift in FDI Strategy
While DPIIT’s Press Note 2 (2026) announced the changes, the DEA must amend the Foreign Exchange Management Act (Non-debt Instruments) Rules through a notification to give a legal basis to the announcement.
The intent of the March announcement was to change the earlier rule of April 2020 that had made government approval mandatory for all FDI from neighbouring countries. The curbs were put to prevent opportunistic takeovers or acquisitions of Indian companies as COVID-19 pandemic struck and seriously eroded valuations of the companies.
The DPIIT had also relaxed the approval process with a fast track 60-day clearance for companies from neighbouring countries for manufacturing capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer, advanced battery components, rare earth permanent magnets and rare earth processing.
The government is also identifying sub-sectors under these seven sectors to fast track approval process.
Scaling New Heights
Shivahare also informed that total FDI, which includes reinvested earnings, has touched $ 88.29 billion during April-February 2025-26. It was $ 80.61 billion in 2024-25. The net FDI into the country has increased to $ 6.26 billion during April-February 2025-26 as against $ 959 million in 2024-25.
“Total foreign direct investment (FDI) is likely to reach $ 90 billion in the full 2025-26 fiscal,” DPIIT Secretary Amardeep Singh Bhatia said at a press conference.
“My interim goal for 2032 is to get and beat China’s $ 116 billion FDI,” Invest India Managing Director and CEO Nivruti Rai said.
According to Rai, annual FDI can touch $ 100 billion if it is business as usual but with reforms an increase of $ 10 billion every year can take inflows to $ 130 billion by 2030.
The department also informed that Invest India, the national investment Promotion and facilitation agency, has facilitated the grounding of 60 projects worth over $ 6.1 billion during 2025 26. These investments span 14 states and are estimated to generate more than 31,000 potential jobs.
About 42% of the total grounded investment value originates from European nations. Continued participation from the United States, Japan, South Korea, Australia, and other key source markets affirms broad-based international confidence in India’s regulatory environment and manufacturing capabilities. Emerging source nations such as Brazil, New Zealand, and Canada indicate diversification in the country’s investment base, Rai said.
Chemicals, pharmaceuticals, biotechnology, and food processing sectors account for about 65 per cent of grounded investments, driven by high-value projects. Emerging sectors such as electronics system design and manufacturing, aerospace and defence, and auto/EV have recorded significant activity.