Government Weighs Easing Press Note 3 Norms With Automatic Approval Route for Low-Value FDI

India is reviewing Press Note 3 (PN3) and may introduce a ‘de minimis’ threshold to permit automatic approvals for smaller foreign investments, people familiar with the discussions told Economic Times.

De minimis is a Latin phrase that implies low-stakes deals.

The government is assessing the feasibility of introducing a de minimis threshold, the report said. Investments below this level could qualify for automatic approval instead of requiring case-by-case clearance.

The proposal is intended to ease compliance requirements and accelerate small-ticket investments, especially in sectors where funding needs are urgent and no sensitive technologies are involved.

Outlook Business reported last November that the government is open to feedback on easing PN3 to create a better investment climate in India, signalling a willingness to recalibrate a policy that has long served as a gatekeeper for capital from India’s neighbours.

The comment came shortly after the Prime Minister’s Office reviewed PN3 in a meeting that brought together representatives from multiple ministries a week earlier.

PN3, introduced in April 2020 at the height of the pandemic, requires companies from countries sharing a land border with India to seek mandatory multi-ministerial approval before investing—extending even to venture capital funds.

The safeguard was designed to prevent “opportunistic takeovers” of Indian firms during a moment of economic vulnerability. It was designed as a shield--primarily targeting China even though it was not named formally. But shields, by nature, also slow things down.

Now, with global capital scanning for stable homes amid geopolitical turbulence, India appears to be assessing whether parts of that shield need reshaping.

India's FDI Concerns

India's gross FDI inflows rose 14% to $81bn last fiscal, but foreign parent firms repatriated $51bn from India in the same period. With a huge surge in repatriation and Indian companies also investing record sums abroad, India's net FDI dropped by 96% to $0.4 bn in FY25.

Yet, India's long-term picture remained positive so, far as FDI inflows have increased 20 times from FY01 to FY25 and stood at $1.09trn between April 2000 and June 2025.

In the case of China, India's largest import partner, the FDI numbers reinforce caution. Chinese investment in India amounted to just $2.5bn, barely 0.3% of total inflows and placing China as only the 23rd largest foreign investor.