In October 2020, DPIIT issued a consolidated FDI policy superseding prior press notes and circulars. It is India’s consolidated foreign-investment framework after a three-year gap.
Investment from neighbouring countries sharing a land border with India, including China, requires government approval regardless of quantum — a response to opportunistic takeovers during the pandemic, including after the Chinese Central Bank’s acquisition of shares in HDFC Bank. Investment from Pakistan remains prohibited in defence, atomic energy, space and other barred sectors. Transfers resulting in restricted beneficial ownership also require approval.
Sectoral changes include a 26% cap, with government approval, on digital news and media; an increase in defence manufacturing FDI from 49% to 74% under the automatic route, with conditions; and 100% FDI under the automatic route for single-brand retail trading.
E-commerce entities with foreign investment face additional audit and related-party restrictions. Investments may be made in equity and specified convertible instruments under automatic or approval routes, with FC-TRS acknowledgement required before recording share transfers.