Overview: The government is considering further paperwork relief for certain foreign investors under Press Note 2 of 2026. The proposal follows changes to India’s foreign direct investment (FDI) rules for overseas entities with non-controlling beneficial ownership linked to countries sharing a land border with India. No further relaxation has been formally announced, so existing reporting and compliance requirements continue to apply.
Foreign investors have gained greater clarity under India’s revised Foreign Direct Investment (FDI) framework, which allows qualifying overseas entities to invest through the automatic route despite certain non-controlling ownership links to land-bordering countries. According to a Business Standard report, the government is now considering whether the paperwork for these investments can be reduced further.
Press Note 2 of 2025
The Department for Promotion of Industry and Internal Trade (DPIIT) issued Press Note 2 on 15th March, 2026. The corresponding amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, was notified on 1st May, 2026.
The revised framework assesses beneficial ownership at the overseas investor-entity level. Government summaries describe the automatic-route relaxation as covering non-controlling beneficial ownership of up to 10%, subject to applicable sectoral caps, entry routes and other conditions. The assessment also considers control and the ownership chain; the percentage alone does not determine eligibility.
Threshold caution: The government summaries use ‘up to 10%’, while the reporting SOP refers to ownership below the applicable threshold. Investors whose structures sit exactly at 10% should verify the applicable notified provisions before relying on the automatic route.
The changes revise the restrictions introduced under Press Note 3 of 2020, which required government approval for covered investments linked to land-bordering countries, including certain indirect ownership structures.
Paperwork Relief Under Consideration
The government is reportedly considering reducing paperwork for companies that do not require prior government approval. The report does not specify which documents or procedures may be removed.
For now, the DPIIT Standard Operating Procedure, dated 4th May, 2026, requires the Indian investee company or the relevant resident Indian transferor or transferee to submit prescribed ownership and investment information.
Reporting must take place before inward remittance of foreign capital. Where no inward remittance is involved, reporting must precede the relevant transaction, including the issue or transfer of capital instruments, as applicable.
These disclosures are additional to existing Foreign Exchange Management Act, 1999, requirements. Applicable Reserve Bank of India (RBI) reporting, including Form FC-GPR or FC-TRS where relevant, must also be completed.
By 20th August, 2026, 29 investments involving proposed FDI of ₹4,895.65 crore had been reported under the revised framework, according to the government.
Checks Before Making an FDI Investment
Before committing to an investment, businesses should review the overseas ownership chain, assess beneficial ownership and control, confirm the applicable entry route, and prepare the required disclosures. They should also check documentation requirements with the authorised dealer bank handling the transaction.
Setindiabiz Support
Setindiabiz supports businesses with foreign subsidiary registration in India, FDI structuring and corporate compliance. Its professionals can assist with reviewing proposed ownership structures, identifying applicable entry-route requirements, preparing ownership disclosures and coordinating relevant FEMA reporting, including applicable RBI filings.
FAQs
No. The government is considering the proposal, but no further relaxation has been formally announced.
Not necessarily. The ownership threshold, control tests and applicable notified provisions must be considered together. Structures at exactly 10% require particular care.
No. DPIIT disclosures do not replace applicable FEMA and RBI reporting requirements.
Further paperwork relief could simplify eligible foreign investments. Until a formal change is announced, businesses should continue to meet existing reporting requirements and verify their eligibility before proceeding.
