Mumbai, Mar 11: The Indian Venture and Alternate Capital Association (IVCA), the apex industry body representing India’s alternate capital ecosystem, has welcomed the Government of India’s decision to amend the guidelines governing investments from countries sharing a land border with India under the Press Note 3 framework.
The Union Cabinet has approved important changes to the Foreign Direct Investment (FDI) policy that provide greater clarity around the definition and determination of beneficial ownership, while enabling investments with non-controlling ownership from land-bordering countries of up to 10 percent under the automatic route. The revised framework also introduces an expedited 60-day approval timeline for investments in select manufacturing sectors.
The industry body noted that the amendments represent a constructive step toward balancing national security considerations with the need to maintain India’s attractiveness as a destination for global capital.
Ashley Menezes, Chairperson, Partner and COO, ChrysCapital, and Chairperson, IVCA, said,
“The Government’s decision to refine the Press Note 3 framework is a timely and thoughtful step that balances national security considerations with the need to maintain India’s attractiveness as a destination for capital. By providing clarity around beneficial ownership and enabling automatic route investments where there is a nominal holding, the policy addresses a long-standing concern faced by investors. This will help restore momentum to capital flows into the country.”
Since the introduction of Press Note 3 in 2020, investments where the beneficial owner was from a country sharing a land border with India required government approval. While the policy was introduced to safeguard against opportunistic takeovers during the pandemic, its application to cases involving minority and non-controlling investors in global fund structures had created practical challenges for cross-border investment flows.
The revised framework now provides clarity for global investors where land-bordering country investors may be present as minority limited partners in diversified global fund structures, thereby easing investment flows from international private equity and venture capital funds.
Rajat Tandon, President, IVCA, said,
“IVCA welcomes the Government’s decision to refine the Press Note 3 framework and provide greater clarity around beneficial ownership and investment pathways. As the industry body representing India’s alternate capital ecosystem, we believe this is a very constructive step that meaningfully eases operational friction for global funds investing into India. The industry will now examine the benefits of the revised framework, but it is fair to say that the changes already mark a significant improvement for fund structures and cross-border capital flows.”
IVCA also noted that the introduction of a defined timeline for approvals in specific manufacturing sectors will help accelerate technology partnerships, joint ventures and supply chain integration, particularly in areas such as electronic components, capital goods and solar manufacturing.
Pratibha Jain, Group General Counsel & Head of Strategy, Everstone Group and IVCA member said,
“The Government’s clarification on the Press Note 3 framework is a welcome and pragmatic step. By bringing greater clarity to the treatment of beneficial ownership and minority participation in global fund structures, the revised policy addresses a long-standing ambiguity for the PE/VC industry. This should help facilitate smoother capital mobilisation and investment flows into India’s growing innovation, technology and manufacturing ecosystem.”
IVCA expressed its gratitude to the Government of India, including the Department for Promotion of Industry and Internal Trade (DPIIT), for engaging with industry stakeholders and introducing measures that strengthen India’s investment environment while maintaining necessary safeguards.
The association believes that the policy changes will support the continued flow of global capital into India’s startup ecosystem, deep-tech innovation and advanced manufacturing sectors, while reinforcing India’s position as a preferred investment destination.
