FDI Rules for Bordering Nations Remain Unchanged in 2025
In a recent clarification, official sources have confirmed that FDI rules for bordering nations such as China, Pakistan, Nepal, Bhutan, Bangladesh, Myanmar, and Afghanistan remain unchanged in 2025. This comes amid speculation about a potential easing of restrictions.
FDI from these nations is still subject to prior government approval, as per the April 2020 press note issued by the Department for Promotion of Industry and Internal Trade (DPIIT).
Why the 2020 Policy Was Introduced
India revised its FDI policy in April 2020 via Press Note 3 (2020 Series) to prevent opportunistic takeovers of Indian firms during the COVID-19 crisis.
Key highlights of the 2020 rule:
- Applies to countries sharing a land border with India
- Any direct or indirect investment requires prior government approval
- Applies even when the investing entity is beneficially owned by a national of such countries
This restriction was aimed primarily at Chinese investments, especially in the tech and fintech space, though it covers seven nations in total.
What Did the Latest Clarification Say?
Government officials, as reported by PTI and Economic Times on June 5, 2025, clarified:
- No relaxation of the FDI policy has been made
- The same approval route continues to apply in 2025
- There is no new notification overriding Press Note 3 of 2020
👉 You can read the official DPIIT notification here:
https://dpiit.gov.in
Industries Impacted Most
| Sector | Impact of FDI Policy for Bordering Nations |
|---|---|
| Fintech | High – Approval mandatory for equity funding |
| E-commerce | Moderate – Foreign platform tie-ups restricted |
| Pharma & Health | Moderate – Deals scrutinised for national security |
| Manufacturing | Low – Small-scale investment still possible |
| Startups (tech) | High – Delayed funding rounds due to approval wait |
Expert View: What Should Startups and SMEs Do?
“Businesses seeking funding from Chinese VC firms or entities based in Hong Kong should structure their cap tables carefully and ensure compliance via RBI + DPIIT routes. Always check for beneficial ownership and consult legal experts before initiating funding,”
– Efiletax Legal Advisory Team
FAQs
Q1. Can companies from bordering nations invest via third countries?
Yes, but if the ultimate beneficial ownership traces back to a bordering country, the approval route still applies.
Q2. Is there a relaxation for smaller investments under ₹10 crore?
No. There is no threshold exemption. All investments need approval regardless of size.
Q3. Where should one apply for approval?
Applications must be filed via the Foreign Investment Facilitation Portal (FIFP): https://fifp.gov.in
Conclusion
The FDI rules for bordering nations remain firmly in place in 2025, with no dilution or easing. Indian businesses planning to raise foreign funds should carefully assess ownership structures and seek timely legal guidance.
Need FDI advisory or RBI-FEMA compliance help?
Efiletax can guide you through the end-to-end process — from structuring to government approvals.
Snippet Summary (40–50 words):
India’s FDI policy for countries sharing land borders remains unchanged in 2025. Prior government approval is still required under the 2020 DPIIT press note. Startups and investors must ensure compliance with beneficial ownership rules and routing through the Foreign Investment Facilitation Portal.
In a recent clarification, official sources have confirmed that FDI rules for bordering nations such as China, Pakistan, Nepal, Bhutan, Bangladesh, Myanmar, and Afghanistan remain unchanged in 2025. This comes amid speculation about a potential easing of restrictions.
FDI from these nations is still subject to prior government approval, as per the April 2020 press note issued by the Department for Promotion of Industry and Internal Trade (DPIIT).
Why the 2020 Policy Was Introduced
India revised its FDI policy in April 2020 via Press Note 3 (2020 Series) to prevent opportunistic takeovers of Indian firms during the COVID-19 crisis.
Key highlights of the 2020 rule:
- Applies to countries sharing a land border with India
- Any direct or indirect investment requires prior government approval
- Applies even when the investing entity is beneficially owned by a national of such countries
This restriction was aimed primarily at Chinese investments, especially in the tech and fintech space, though it covers seven nations in total.
What Did the Latest Clarification Say?
Government officials, as reported by PTI and Economic Times on June 5, 2025, clarified:
- No relaxation of the FDI policy has been made
- The same approval route continues to apply in 2025
- There is no new notification overriding Press Note 3 of 2020
👉 You can read the official DPIIT notification here:
https://dpiit.gov.in
Industries Impacted Most
| Sector | Impact of FDI Policy for Bordering Nations |
|---|---|
| Fintech | High – Approval mandatory for equity funding |
| E-commerce | Moderate – Foreign platform tie-ups restricted |
| Pharma & Health | Moderate – Deals scrutinised for national security |
| Manufacturing | Low – Small-scale investment still possible |
| Startups (tech) | High – Delayed funding rounds due to approval wait |
Expert View: What Should Startups and SMEs Do?
“Businesses seeking funding from Chinese VC firms or entities based in Hong Kong should structure their cap tables carefully and ensure compliance via RBI + DPIIT routes. Always check for beneficial ownership and consult legal experts before initiating funding,”
– Efiletax Legal Advisory Team
FAQs
Q1. Can companies from bordering nations invest via third countries?
Yes, but if the ultimate beneficial ownership traces back to a bordering country, the approval route still applies.
Q2. Is there a relaxation for smaller investments under ₹10 crore?
No. There is no threshold exemption. All investments need approval regardless of size.
Q3. Where should one apply for approval?
Applications must be filed via the Foreign Investment Facilitation Portal (FIFP): https://fifp.gov.in
Conclusion
The FDI rules for bordering nations remain firmly in place in 2025, with no dilution or easing. Indian businesses planning to raise foreign funds should carefully assess ownership structures and seek timely legal guidance.
Need FDI advisory or RBI-FEMA compliance help?
Efiletax can guide you through the end-to-end process — from structuring to government approvals.
Summary
India’s FDI policy for countries sharing land borders remains unchanged in 2025. Prior government approval is still required under the 2020 DPIIT press note. Startups and investors must ensure compliance with beneficial ownership rules and routing through the Foreign Investment Facilitation Portal.