Who the rule covers
The land-border rule applies to investment by:
- an entity of, or a citizen of, a country that shares a land border with India; or
- an investor whose beneficial owner is such an entity or citizen.
For a company, a beneficial owner is a person holding more than 10%, or having control. Beneficial ownership is tested under the anti-money-laundering rules. The test looks through the investor chain, so a land-border owner anywhere in the chain can bring an investment within the rule.
Where the rule applies, the investment needs government approval even in a sector that is otherwise open on the automatic route. A later transfer of shares that brings ownership within the rule also needs approval.
What Press Note 2 of 2026 changed
Press Note 2 was issued on 15 March 2026 and took legal effect through the amendment to the FEMA (Non-debt Instruments) Rules published on 2 May 2026. It clarified the rule and partly eased it in two ways.
Within 10%: report first
Land-border beneficial ownership of 10% or less, without control, may use the automatic route. The investment must, however, be reported on the FIF/NSWS portal before the money is remitted, or before the transaction if there is no remittance.
The 60-day fast track
A land-border investor taking up to 49% in an Indian-controlled company that makes any of the following has a 60-day decision target:
- capital goods
- electronic components
- polysilicon or wafers
- advanced battery components
- rare-earth magnets and processing
Resident Indians must keep majority ownership and control. Vehicles themselves are not on the list, so a vehicle maker with a land-border owner uses the standard government route.
| Situation | Route | Timing |
|---|---|---|
| Land-border beneficial ownership of 10% or less, no control | Automatic, with prior report on FIF/NSWS | Report before remittance |
| Up to 49% in an Indian-controlled company in a listed sector | Government route, fast track | 60-day decision target |
| Any other land-border investment | Government route | 12-week decision target, plus two weeks where rejection or conditions are proposed |
Any investor with land-border ownership should apply the 2026 test before signing.
How an application runs
Applications are filed on the FIF/NSWS portal. DPIIT routes the file to the administrative ministry. The Ministry of Home Affairs comments, and the Ministry of External Affairs also comments on land-border cases. Proposals above ₹5,000 crore of foreign equity go to the Cabinet Committee. Time taken by the applicant to answer queries is excluded from the targets in DPIIT’s standard operating procedure of 4 May 2026.
Sector points
- Telecom: land-border investors need government approval, and telecom services also need authorisation under the Telecommunications Act 2023.
- Manufacturing and automotive: the fast-track list was designed around supply chains. Advanced battery components, electronic components and capital goods are on it; finished vehicles are not.
- Joint ventures: the fast track works through a joint-venture structure in which the Indian partner keeps majority and control. See entry vehicles.
Check: Draft Foreign Investment Rules, intended to replace the Non-debt Instruments Rules, were open for consultation from 21 July to 31 August 2026. Confirm the land-border provisions in any final text before filing.
What to check next
- Map every shareholder up to the ultimate owners and test each for land-border citizenship or incorporation and for control rights.
- Where land-border ownership is 10% or less without control, file the prior report on FIF/NSWS before any money moves.
- For a listed-sector joint venture, document that resident Indians hold majority ownership and control, and keep it that way after later funding rounds.
- Treat share transfers with care: a sale that brings a land-border owner over 10% or into control needs approval first.
- Build the 60-day or 12-week target, plus time for queries, into the investment timetable.