INDIA: FDI from All Land-Bordering Countries Now Subject to Official Sanction

Prior government approval is now required for any Foreign Direct Investment (FDI) in India originating from a bordering nation. The new regulation, as recently announced by the Ministry of Finance, applies equally to businesses and individuals, as well as in instances where the ultimate beneficial owner of any such investment resides in/is a citizen of a country sharing a land border with India. In addition, any changes in ownership that bring a prior investment within the remit of the new legislation must also be first approved by the government.

Previously, such a requirement only applied to Bangladeshi and Pakistani businesses and individuals, with all other overseas-sourced investments eligible for automatic approval. According to government sources, the revised legislation is intended to prevent opportunistic takeovers and acquisitions of struggling Indian companies in the wake of the ongoing coronavirus outbreak. While no specific countries are named in the new regulations, the countries that clearly fall within its remit are Myanmar, Nepal, Bhutan and China.