The Press Note 3 (2020 Series), or PN3, is a provision that amended India's Foreign Direct Investment (FDI) policy, issued by the Department for Promotion of Industry and Internal Trade (DPIIT) on April 17, 2020. It was created during the early weeks of the COVID-19 pandemic to prevent "opportunistic takeovers/acquisitions" of financially distressed Indian companies by foreign entities.
The core mechanism of PN3 is the mandatory shift from the 'automatic route' to the 'Government route' for all FDI from countries that share a land border with India. This means that any investment from an entity of, or where the beneficial owner is a citizen of or situated in, Afghanistan, Bangladesh, Bhutan, China, Myanmar, Nepal, or Pakistan requires prior government approval. This requirement also applies to any subsequent transfer of ownership that results in the beneficial ownership falling under this purview. PN3 amended Paragraph 3.1.1 of the Consolidated FDI Policy and was subsequently incorporated into Rule 6 of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (FEMA 20(R)).
The policy was recently calibrated by the government in March 2026. The amendment, announced via Press Note 2 (2026 Series), introduced an 'automatic route' for investments where the land-bordering country's beneficial ownership is non-controlling and up to 10%. Furthermore, the definition of 'Beneficial Ownership' was aligned with the framework under the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. The core principle of requiring government approval for controlling or majority investments from these countries remains unchanged.