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Press Note 3 Relaxation to Support FDI Inflows and Strategic Partnerships

ICICIdirect Research 16 Mar 2026 DISCLAIMER

India has eased certain foreign direct investment restrictions for countries sharing land borders with India by amending the Press Note 3 framework. The rules introduced in 2020 required government approval for such investments to prevent opportunistic acquisitions and potential hostile takeovers.

Under the revised framework, global investors with up to 10% non-controlling beneficial ownership from these countries can invest through the automatic route. In addition, strategic proposals in sectors such as capital goods, electronic components and solar manufacturing will receive faster government approvals within about 60 days. Nearly 600 proposals are currently awaiting approvals and quicker clearances could accelerate technology partnerships, localisation of components and overall growth of the manufacturing ecosystem.

Within the electronics manufacturing services ecosystem, Dixon Technologies could benefit as approval for its proposed joint venture with Vivo remains pending. The company is also awaiting clarity on a display fabrication partnership with HKC. The Vivo joint venture could add about 1.8 crore smartphone volumes to its FY26 estimate of about 3.4 crore units. Dixon has also received approval for a display module which could support margin improvement.

PG Electroplast may also benefit if approvals for its collaboration with Highly Group for compressors move faster. Other electronics manufacturing services companies such as Kaynes have also indicated opportunities to partner with Chinese firms to strengthen their role in the value chain.

Buy ratings are maintained on Dixon Technology, Syrma, Amber and Kaynes among electronics manufacturing services companies.

The policy relaxation in sectors such as capital goods manufacturing, polysilicon and wafer manufacturing for solar supply chains and advanced battery components aims to reduce approval delays and attract minority foreign investors. This could support manufacturing investments in power equipment, solar and battery ecosystems.

Companies that could benefit include BHEL, Siemens India, Schneider, Waaree Energies, Tata Power, CG Power and ABB India.

Buy rating is maintained on BHEL.

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