Sahajanand Medical: 100% FDI still needs approval above 10%

Sahajanand Medical Technologies Limited, referred to here as Sahajanand Medical, is in a medical-device manufacturing sector that permits up to 100% foreign direct investment, or FDI, through the automatic route. Its offer document says Government of India approval can still be required when citizens or entities of countries sharing a land border with India hold more than 10% of an investor or exercise specified control.

What foreign-investment rule applies to Sahajanand Medical?

Sahajanand Medical is covered by a disclosed policy that permits up to 100% FDI in medical-device manufacturing under the automatic route. The automatic route means foreign investment can ordinarily be made without prior government approval, subject to the sectoral policy and other applicable conditions. The offer document places this allowance within the Industrial Policy, 1991, the Foreign Exchange Management Act, or FEMA, and the FDI policy consolidated by the Department for Promotion of Industry and Internal Trade, or DPIIT.

The 100% sectoral allowance does not determine every foreign investor's eligibility. The disclosure says foreign investment in Indian companies, except in prohibited sectors, may be made through either the automatic route or approval route according to the applicable sector and conditions. For Sahajanand Medical, medical-device manufacturing sets the automatic-route baseline, while certain beneficial ownership and control links create a separate prior-approval requirement.

Does Sahajanand Medical's 100% FDI allowance remove approval?

No. Sahajanand Medical's 100% automatic-route FDI allowance does not remove the Government of India approval requirement for investments captured by the border-country beneficial-ownership rules. The offer document says FDI by an entity from a country sharing a land border with India, or investment involving a beneficial owner situated in or a citizen of such a country, is subject to the policy restrictions.

The policy definition changed after Press Note 3 of 2020, dated April 17, 2020. DPIIT's Press Note No. 2 of 2026, dated March 15, 2026, defined “beneficial owner” for this purpose and stated that prior approval is required only where the specified ownership or control conditions are met. The 2026 amendment was notified through the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2026, dated May 1, 2026, with effect from May 2, 2026.

When does the 10% beneficial-owner threshold trigger approval?

Government approval is required where citizens or entities of a country sharing a land border with India hold, directly or indirectly and individually or cumulatively, more than 10% of the shares, capital or profits of an investor entity. The March 15, 2026 policy also covers rights or entitlements above 10%, whether held independently or collectively and whether persons are acting together or otherwise. The test can therefore apply to an investor incorporated or registered outside a border-sharing country when its underlying ownership meets the stated condition.

The more-than-10% threshold is not the only approval trigger. Sahajanand Medical's disclosure also covers circumstances in which the relevant citizens or entities exercise control over the investor entity or ultimate effective control over the Indian investee entity in any manner. The offer document gives no numerical threshold for either control test, meaning an ownership interest of 10% or less does not by itself settle the approval question where control rights exist.

The May 2, 2026 rules also apply to a later ownership change. A direct or indirect transfer of existing or future FDI in an Indian entity requires Government of India approval if it results in beneficial ownership falling within the disclosed restriction. The rule is therefore relevant both when a foreign investor participates in Sahajanand Medical's offer and when ownership of a foreign investor changes after an investment has been made.

What must a Sahajanand Medical bidder check before participating?

A Sahajanand Medical bidder must assess its ownership and control chain against the more-than-10% and control conditions before participating. The company tells each bidder to seek independent legal advice on its ability to participate. If prior approval is required and obtained, the bidder must inform Sahajanand Medical and the registrar to the offer in writing, with a copy of the approval, during the Offer Period.

A transfer of shares between an Indian resident and a non-resident does not require prior Reserve Bank of India, or RBI, approval if three stated conditions are met. Sahajanand Medical's activity must be under the automatic route and the transfer must not attract Securities and Exchange Board of India takeover regulations; non-resident shareholding must remain within sectoral limits; and pricing must follow the stated guidelines. Those conditions do not displace a separate Government of India approval requirement where the border-country beneficial-ownership restriction applies.

The offer document identifies overseas corporate bodies, or OCBs, as unable to participate in the offer under the existing Government of India policy and RBI regulations. Sahajanand Medical also tells bidders to ensure that the number of Equity Shares for which they bid does not exceed applicable legal or regulatory limits. A multilateral bank or fund of which India is a member is not treated as an entity of a particular country, and no country is treated as the beneficial owner of such a bank's or fund's investments in India under the disclosed 2020 FEMA amendment.

Conclusion

Sahajanand Medical's position combines a 100% automatic-route FDI allowance for medical-device manufacturing with a targeted ownership-and-control screening rule. The material comparison is between the sectoral limit and the March 2026 beneficial-owner standard: foreign investment is permitted by the sector classification, but a border-country link exceeding 10% or a relevant control right can require Government of India approval.

The next point to watch is the ownership path of any foreign bidder or later transferee following the May 2, 2026 effective date of the amended FEMA non-debt instruments rules. Sahajanand Medical's disclosed process requires an investor needing approval to obtain it and submit written evidence to the company and registrar during the Offer Period, while the offer document also notes that applicable laws and regulations may change after its date.