India is reviewing the framework under Press Note 3 (2020), which mandates prior government approval for foreign direct investment (FDI) from entities based in countries sharing a land border with India. Introduced in April 2020 during the COVID-19 pandemic to prevent opportunistic takeovers of vulnerable Indian companies amid heightened geopolitical tensions. However, the government is examining measures to streamline approvals for smaller investments in light of evolving economic needs and relatively improved regional dynamics.

Authorities are reportedly considering a de minimis threshold that could allow automatic approval for low-value or minority investments, reducing compliance burdens, accelerating capital inflows, and addressing delays under the current case-by-case process. Any relaxation is likely to exclude sensitive sectors, particularly those involving critical or strategic technologies, and will remain subject to national security scrutiny.

The proposed changes aim to address industry concerns that even routine transactions are delayed, as all investments from bordering countries currently require approval regardless of size. A calibrated easing could facilitate faster funding for Indian start-ups and growth-stage companies, support the “Make in India” initiative, and enable timely capital infusion for non-sensitive sectors while maintaining safeguards against opportunistic acquisitions.

Overall, the review reflects a balanced approach, preserving the protective intent of Press Note 3 while easing procedural hurdles for low-risk investments. The review is however unlikely to relax restrictions for Pakistan and Bangladesh.