The government is considering further easing of provisions under Press Note 2 (PN2) to attract more investments from companies with less than 10% beneficial ownership by Chinese investors. Under revised framework, the aim will be to have less complicated paperwork, said sources as the government seeks to facilitate foreign investment while retaining scrutiny of Chinese-linked capital.
“There could be further easing of the provisions under Press Note 2, especially in the documentation process,” a source in the Commerce Ministry said.
Press Note 2 (2026 Series) was issued by the Department for Promotion of Industry and Internal Trade (DPIIT) on March 15, 2026, to amend India’s foreign direct investment (FDI) policy for investments from countries sharing a land border with India, modifying the restrictions introduced under Press Note 3 in 2020.
Under the revised policy, foreign entities with up to 10% non-controlling beneficial ownership from land-bordering countries can invest through the automatic route without prior government approval, subject to the prescribed conditions. The move marked a relaxation of the restrictions in place for five years.
Press Note 3, issued in April 2020, mandated prior government approval for investments from countries sharing a land border with India. The measure was introduced to curb opportunistic takeovers of Indian companies during the Covid-19 pandemic.
The relaxation is expected to facilitate greater capital inflows, particularly into sectors such as startups, where access to funding remains important for growth.
Separately, the government has earmarked Rs 270 crore for the Small Industries Development Bank of India (SIDBI) under the second edition of the Fund of Funds for Startups (FoF 2.0). Fifteen alternative investment funds (AIFs) are being finalised to receive investments under the programme, sources said.
The government is also identifying products that can be manufactured domestically to reduce import dependence. A list of 100 intermediate goods has been drawn up following inter-ministerial consultations to identify potential import substitutes, reduce reliance on overseas suppliers and strengthen domestic supply chains, the sources said.
