Investment rule tweaks will benefit electronics and rare earth sector in India, says DPIIT Secretary

The easing of rules related to investment from countries sharing a land border with India will help in the manufacture of capital goods, electronic capital goods, electronic components, polysilicon and ingot wafers, advanced battery components, rare earth permanent magnets, and rare earths themselves, Department for Promotion of Industry and Internal Trade Secretary Amardeep Singh Bhatia said on Wednesday (March 11, 2026). 

Sector analysts and industry players too have welcomed the move, saying it will increase the flow of capital into India, and encourage foreign companies to enter into joint ventures here. 

Minority ownership allowed

The Union Cabinet on Tuesday (March 10, 2026) approved changes to the ‘Press Note 3’ issued in 2020 that had mandated that investments from all countries that shared a land border with India — referred to as Land Border Countries (LBCs) — would have to secure Indian government approval first. 

The new changes now provide exemptions to companies where less than 10% ownership is from LBCs. Further, proposals for LBC investment in specified sectors such as capital goods manufacturing, electronic capital goods manufacturing, electronic component manufacturing, polysilicon and ingot wafers, advanced battery components, rare earth permanent magnets, and rare earths would be cleared within 60 days.

‘Will improve investment certainty’

“Scrutiny of the proposals and political concerns will continue, but the Committee of Secretaries will expedite the proposals within the time limit of 60 days” Mr. Bhatia said at a press briefing. 

“It [the amendment] will bring a lot of certainty, as there was a lot of interest in investment in India,” he added, saying that the change would also eventually reduce India’s import dependence.  

Under the Press Note 3 rules, previously, if even a single shareholder in a foreign company belonged to a country that shared a land border with India, that company would come under the Press Note 3 restrictions, Mr. Bhatia explained. As a result, a lot of capital looking to enter India was being blocked or delayed.  

Electronics sector to benefit

Industry bodies and investment analysts have welcomed the decision, saying it could bring in more capital flows from companies that only have minority shareholding from LBCs.

“For India’s electronics sector, this policy can help accelerate investments and high volume process technologies in electronic components, passive devices, connectors, PCB fabrication, electronic capital goods, and upstream materials such as polysilicon and silicon wafers, which are essential building blocks of the electronics manufacturing ecosystem,” Ashok Chandak, president of the India Electronics and Semiconductor Association said.  

Revival of capital flows, collaborations

Further, according to Atul Pandey, Partner at Khaitan & Co, the relaxation of rules for minority participation is of particular importance. 

“While national security concerns remain safeguarded through the approval route for controlling investments, the relaxation for minority participation could help revive capital flows, particularly through global funds and strategic partnerships in manufacturing and technology sectors,” Mr. Pandey said.

Vaibhav Kakkar, Senior Partner at Saraf and Partners, pointed out that the 60-day timeline also provides clarity and certainty for joint ventures and collaborations in India.

“For joint ventures where Chinese or other land-bordering country investors hold any direct stake in an Indian entity, the Government approval route will continue to apply, albeit with a now-defined 60-day timeline if such investment is in specified manufacturing sectors, providing much-needed clarity and deal certainty for technology-driven collaborations,” Mr. Kakkar noted.