FDI & Director Approval in India for Foreign Nationals from Land-Border Countries
India received US$58.85 billion in FDI equity inflows in FY 2025-26, an 18% increase over the prior year, according to DPIIT data released in June 2026. For investors and individuals from countries sharing a land border with India (China, Pakistan, Bangladesh, Bhutan, Nepal, Myanmar, and Afghanistan), two separate approval tracks apply: one for the investment itself and one for any individual from these countries seeking a directorship in an Indian company. Both were significantly revised in 2026 and 2022, respectively, and both are frequently confused with each other.
FDI Approval for Land-Border Country Investors: What Changed in 2026
Since April 2020, Press Note 3 has required entities from land-border countries or entities whose beneficial owner is situated in or a citizen of such a country to invest in India only through the government approval route. In March and May 2026, this framework was materially eased by Press Note 2 (2026 Series):
- Automatic route now available up to 10% non-controlling ownership. Investments where a land-border-country investor holds up to 10% and does not exercise control no longer require prior government approval, only a reporting obligation to DPIIT.
- “Beneficial owner” is now defined against the beneficial-ownership thresholds in the PMLA (Prevention of Money Laundering) KYC Rules, 2005, closing a five-year interpretive ambiguity.
- 60-day expedited approval now applies to government-route applications in six focus sectors: capital goods, electronic capital goods and components, polysilicon and ingot-wafer, advanced battery components, and rare earth magnets/processing, provided majority shareholding and control remain with resident Indian citizens or entities.
For a full breakdown of the amendment itself, see our dedicated analysis of the Press Note 2 (2026) amendment to the FDI policy.
Who Still Needs Government Route Approval
Investments exceeding the 10% non-controlling threshold, or involving actual control of the investee entity, continue to require prior government approval via DPIIT, processed under the revised Standard Operating Procedure issued in May 2026. Transfers of existing or future FDI resulting in a change of beneficial ownership toward a land-border-country person also require prior approval, regardless of the resulting percentage.
MHA Security Clearance for Directors from Land-Border Countries
Separately from the investment-level approval above, any individual who is a national of a land-border country and intends to serve as a director of an Indian company must obtain security clearance from the Ministry of Home Affairs before a Director Identification Number (DIN) can be issued a requirement in force since June 2022 under the Companies (Appointment and Qualification of Directors) Amendment Rules. No DIN application number is generated without this clearance attached. Applications are filed through the MCA’s eSahaj Sewa portal, and clearance must accompany Form DIR-2 (consent to act as director) and Form DIR-3 (DIN application). Existing directors appointed before the rule took effect are not required to seek retrospective clearance.
How MBG Supports Foreign Investors and Directors
MBG’s India market entry and legal advisory teams support both tracks:
- Assessing whether a proposed investment qualifies for the 10% automatic-route carve-out or requires Government approval
- Preparing and filing DPIIT applications, including expedited filings in the six focus sectors
- Preparing and filing MHA security clearance applications for proposed directors via eSahaj Sewa
- Coordinating DIN and director appointment filings (DIR-2, DIR-3, DIR-12) alongside clearance
Our Service Deck: Plan Your FDI in India