FDI Policy and Trends — Policy Reforms

Entry	Year	Description	Impact
Press Note 3 of 2020	2020	Introduced mandatory government approval for all FDI from countries sharing land borders with India, regardless of sectoral caps or automatic route eligibility. This measure primarily targeted Chinese investments amid border tensions and security concerns.	Significantly reduced Chinese FDI flows and established precedent for geo-economic policy making, balancing economic openness with national security considerations in foreign investment decisions.
Defense Sector Liberalization	2020	Increased FDI limit in defense sector from 49% to 74% under automatic route, with 100% permitted under government route for cases resulting in access to modern technology or other benefits.	Enhanced India's defense manufacturing capabilities, attracted global defense majors, and supported Atmanirbhar Bharat initiative by reducing import dependence in critical defense equipment.
Coal Mining Sector Opening	2020	Permitted 100% FDI in coal mining activities including associated processing infrastructure, ending decades of restriction in this strategic sector.	Opened opportunities for foreign technology and investment in coal sector modernization, supporting India's energy security objectives while maintaining environmental safeguards.