Foreign Investment — Policy Reforms

Entry	Year	Description	Impact
FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (as amended over time)	2000 onwards	These regulations, issued under FEMA, detail the specific conditions, restrictions, and reporting requirements for foreign investment in India. Numerous amendments have been made to these regulations over the years to liberalize sectoral caps, simplify procedures, and clarify definitions.	Led to a gradual and significant liberalization of FDI policy, expanding the automatic route, increasing sectoral caps in various industries, and streamlining the approval process, thereby making India a more attractive destination for foreign capital.
SEBI (Foreign Portfolio Investors) Regulations, 2014 & 2019	2014, 2019	The 2014 regulations merged existing FII and QFI categories into a new FPI regime, simplifying and rationalizing the investment framework for portfolio investors. The 2019 regulations further streamlined the FPI framework, introducing a risk-based categorization and simplifying KYC requirements.	Simplified the entry and operational framework for foreign portfolio investors, enhancing ease of doing business in Indian capital markets. The 2019 regulations aimed to make the FPI regime more investor-friendly, reduce compliance costs, and attract greater portfolio inflows by addressing operational challenges.
Press Note 3 (2020 Series)	2020	Issued by DPIIT, this amendment mandated prior government approval for FDI from entities of countries sharing a land border with India, or where the beneficial owner of an investment is situated in or is a citizen of any such country.	Introduced a national security screening mechanism for FDI, particularly aimed at preventing opportunistic takeovers or acquisitions of Indian companies during the COVID-19 pandemic. It significantly impacted investment flows from neighboring countries and highlighted geopolitical considerations in FDI policy.