Mumbai: The Indian Venture and Alternate Capital Association (IVCA) has welcomed the Government of India’s decision to update the Press Note 3 investment rules. The move is expected to make it easier for global investors to invest in India, especially in sectors like startups, deep-tech and advanced manufacturing.

The Union Cabinet has approved changes in the Foreign Direct Investment (FDI) policy. Under the revised framework, investments from countries that share a land border with India can now take place under the automatic route if the ownership is non-controlling and up to 10 percent. The policy also provides clearer guidelines on how beneficial ownership will be defined and assessed. In addition, the government has introduced a fast-track approval timeline of 60 days for investments in certain manufacturing sectors.

IVCA said these changes help balance national security concerns with the need to keep India attractive for global investment.

Ashley Menezes, Chairperson of IVCA and Partner & COO at ChrysCapital, said the updated policy brings much-needed clarity for investors.

“The Government’s decision to refine the Press Note 3 framework is timely and balanced. By providing clarity on beneficial ownership and allowing small investments through the automatic route, the policy addresses long-standing concerns of investors and will help restore momentum in capital flows into India.”

Press Note 3 was introduced in 2020 during the pandemic to prevent opportunistic takeovers of Indian companies. Under the earlier rules, any investment where the beneficial owner was from a country sharing a land border with India required government approval. However, the rule also affected minority investors who were part of global investment funds, creating difficulties in cross-border investment flows.

The revised policy now provides more clarity in such cases, especially when investors from neighbouring countries are only minority partners in large global funds. This is expected to make it easier for international private equity and venture capital funds to invest in India.

Rajat Tandon, President of IVCA, said the updated framework will reduce operational challenges for global funds.

“IVCA welcomes the Government’s decision to refine the Press Note 3 framework and clarify investment pathways. The changes significantly reduce operational hurdles for global funds investing in India and will improve cross-border capital flows.”

IVCA also highlighted that the new 60-day approval timeline for certain manufacturing investments could encourage more technology partnerships, joint ventures and supply chain collaborations in sectors such as electronic components, capital goods and solar manufacturing.

Pratibha Jain, Group General Counsel and Head of Strategy at Everstone Group, said the clarification in the policy will help the private equity and venture capital industry mobilise capital more smoothly.

“The Government’s clarification on Press Note 3 is a practical step. Greater clarity on beneficial ownership and minority participation in global funds will help improve capital mobilisation and support investment in India’s innovation and manufacturing ecosystem.”

IVCA also thanked the Government of India and the Department for Promotion of Industry and Internal Trade (DPIIT) for engaging with industry stakeholders while shaping the policy changes.

According to the association, the revised framework will help attract more global capital into India’s startup ecosystem, deep-tech innovation and advanced manufacturing, further strengthening India’s position as a major global investment destination.