India has eased foreign investment rules for countries sharing land borders with it, including China, by amending a key provision that earlier required mandatory government approval for such investments.The Union Cabinet on Tuesday approved changes to Press Note 3 of 2020, which had mandated prior government approval for investments from entities based in countries sharing land borders with India.Official sources said the move was aimed at streamlining foreign direct investment (FDI) and facilitating inflows into sectors such as startups, deep technology and manufacturing.Countries sharing land borders with India include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.Under Press Note 3, issued by the Department for Promotion of Industry and Internal Trade (DPIIT) in April 2020, foreign companies with shareholders from these countries were required to obtain government approval for investments in any sector in India.The provision also applied where the beneficial ownership of an investment was located in any of these countries, even if the investment was routed through another jurisdiction.Before this measure was introduced, most sectors allowed FDI through the automatic route, meaning investors did not need prior government clearance. Press Note 3 shifted such investments to the government route, requiring approval from the Centre.The policy had been introduced during the Covid-19 pandemic, when global markets had fallen sharply. Officials said the measure was intended to prevent opportunistic takeovers of Indian companies whose valuations had declined during the economic slowdown.According to an official statement, the amendments are expected to increase FDI inflows from global funds into startups and deep-technology companies while improving the ease of doing business.The revised guidelines also specify a 60-day timeframe for decisions on investment proposals, enabling companies to form collaborations and expand manufacturing in India.Officials said the timeline would help support partnerships aimed at accessing technologies and integrating Indian companies into global supply chains.The updated policy is expected to benefit manufacturing in electronic components, capital goods and solar cells, among other sectors.The revision also introduces a clear definition and criteria for identifying the ‘Beneficial Owner’, aligned with the Prevention of Money Laundering Rules, 2003, with the assessment to be applied at the investor entity level.Under the new provisions, investors with non-controlling beneficial ownership from land-border countries of up to 10 per cent will be allowed under the automatic route, subject to sectoral caps and reporting requirements to the DPIIT.Investment proposals involving land-border countries in sectors such as capital goods manufacturing, electronic capital goods, electronic components, polysilicon and ingot-wafer production will be processed within 60 days.A Committee of Secretaries under the Cabinet Secretary will have the authority to update the list of specified sectors.The government has also clarified that majority shareholding and control of the investee entity must remain with resident Indian citizens or Indian entities controlled by them at all times, in order to prevent opportunistic takeovers.China stands at the 23rd position with only 0.32 per cent share ($2.51 billion) in the total FDI equity inflow reported in India from April 2000 to December 2025.