Japan Newsletter (January - March 2026)

The India-Japan partnership is entering what may be called as a significantly consequential phase. The 18^th India-Japan Strategic Dialogue in January 2026 marked a decisive shift towards a deeper and more pragmatic alignment centred on economic security, translating the Joint Vision launched during Prime Minister Modi's August 2025 visit to Japan into concrete institutional frameworks. 

On the investment side, the trajectory is striking, building on the 2022-2026 target of JPY 5 trillion in public and private investment, both sides have now set a new target of JPY 10 trillion in private investment. Most recently, Japan's Ministry of Foreign Affairs established a dedicated office to expand economic cooperation with India and support Japanese companies looking to enter the world's most populous market. The strategic logic is mutual, as India offers manufacturing scale, a demographic dividend, and a growing consumer base, while Japan brings technological depth and capital in semiconductors, critical minerals, and clean energy. For Japanese entities operating in or through India, the regulatory and structural environment is evolving rapidly to match this ambition, making legal and transactional readiness more important than ever.

In this newsletter, we highlight key legal and regulatory developments in India over this quarter of 2026.

サマリー

セクション A：セクター別アップデート

(1)            電子部品製造支援スキーム（ECMスキーム）

2026-27年度連邦予算において、ECMスキームの予算枠が44億米ドルに増額されました。これは国内の電子機器製造を強力に推進する政府の姿勢を反映したものです。本スキームは、サブアッセンブリや資本財を含む部品レベルの生産を優先しており、半導体関連の施策と相互に補完し合うことで、インドにおける電子機器製造の包括的なエコシステム構築を目指しています。

(2)           1981年大気（汚染の防止及び規制）法および1974年水（汚染の防止及び規制）法に基づき改正された統一同意ガイドライン

この統一認可ガイドラインの改正により、操業認可の有効期限が取消時まで延長し、高汚染産業の承認期間も短縮されるなど、規制プロセスが合理化されました。また、一部の中小・零細企業（MSME）に対するみなし承認の導入や、敷地固有の要件判断を専門機関へ移管することも盛り込まれ、環境監視を維持しつつ、ビジネス環境の改善を図ることを目的としています。

(3)           2026年固形廃棄物管理規則の公布

「2026年固形廃棄物管理規則」は、適用範囲が農村地域まで拡大されました。効率性と持続可能性を高めるため、4区分への廃棄物分別が義務付けられています。また、大量廃棄物排出者の定義が拡張され、分散型処理を含むより厳格な遵守義務が課されます。さらに、廃棄物管理における説明責任を強化するため、キャップ・アンド・トレード方式の「拡張大量廃棄物排出者責任」枠組みも導入されました。

(4)           小規模水力発電開発スキーム（SHPスキーム）の発表

2026-31年度を対象としたSHPスキームが承認されました。予算枠は2億8,400万米ドルで、特に丘陵地帯や北東部地域において1,500MWの設備容量を目標としています。本スキームでは、連邦政府による財政支援や、プロジェクト開発および詳細プロジェクト報告書作成のための資金提供が行われます。投資の促進、雇用の創出、および分散型再生可能エネルギーの推進に寄与することが期待されています。

(5)            バイオ医薬品・シャクティ・スキーム（Shaktiスキーム）

5年間で1億1,000万米ドルの予算を投じる本スキームは、インドのバイオ医薬品エコシステムを強化し、バイオ製剤およびバイオシミラー分野における国際競争力を高めることを目的としています。これには、インフラ拡張、臨床試験ネットワークの構築、規制体制の強化が含まれます。国内製造やイノベーションを促進し、輸入依存度を下げながら承認プロセスの迅速化を図ります。

セクション B：その他のアップデート

(1)           2026年外国為替管理（保証）規則

インド準備銀行（RBI）は、クロスボーダー保証の枠組みを抜本的に見直しました。従来の「個別許可ベース」の制度から、基礎となる取引の適法性に連動した「原則ベース」のアプローチへと移行しました。この新規則により定義が明確化され、対内保証が明示的に許可されるなど、規制の透明性が向上しています。また、報告遅延を是正するための遅延提出手数料（LSF）の仕組みも導入されました。

(2)            2026年外国為替管理（物品およびサービスの輸出入）規則

本規則により、輸出報告が単一の「輸出申告書」に統合され、物品・サービス・ソフトウェア全般の手続きが簡素化されました。輸出代金の回収期限が延長され（インドルピー建て取引については最大18ヶ月）、輸入支払期限の硬直的な制限も撤廃されるなど、契約上の柔軟性が確保されました。また、物品とサービスの取引間での相殺を認め、認可ディーラー銀行の責任と権限が拡大されています。

(3)           SEBIによる上場義務および開示要件（LODR）改正規則の通知

インド証券取引委員会（SEBI）は、LODR規則を改正し、特別株主権の開示が正式に定められ、投資家向けサービスのプロセスが簡素化されることで、コーポレート・ガバナンスが強化されました。確認書などの仲介手続きを廃止し、処理期間を大幅に短縮しています。また、高額債務の上場企業の基準額が引き上げられ、中規模企業のコンプライアンス負担が軽減されました。

(4)           最高裁判所、第21条に基づく仲裁手続の開始時期を明確化

最高裁判所は、1996年仲裁調停法第21条に基づき、仲裁手続は「仲裁を申し立てる通知を相手方が受領した時点」で開始されると判示しました。この判断は同法全体に一律に適用され、これまでの司法判断の相違を解消するものです。これにより手続の明確性が確保され、当事者自治が強化されます。

(5)           2026年企業コンプライアンス促進スキーム（CCFS）

企業法務省（MCA）は、未提出書類の提出、休眠ステータスの申請、または自発的な登記抹消を対象に、大幅な手数料免除を行う期間限定の措置を導入しました。対象企業は、追加手数料の最大90%免除や罰則からの免責を受けることができます。本スキームは、より厳格な法的執行が行われる前の最後の機会と位置付けられています。

(6)            2020年プレスノート第3号（Press Note 3）の改正

政府は外資規制を改定し、実質的受益権の閾値を明確化するとともに、陸上で国境を接する隣接国からの特定の投資について、10%までの自動認可ルートを導入しました。半導体などの戦略分野には60日間の迅速承認メカニズムが導入されています。この改正は、国家安全保障と投資の促進、サプライチェーン構築のバランスを図るものです。

Section A: Sector Updates

1. Electronics components manufacturing scheme (ECM Scheme)

The ECM Scheme received a boost with an increased outlay of USD 4.4 billion, signalling a strong push toward domestic electronics manufacturing as part of the Union Budget 2026-27. The ECM Scheme prioritises component-level production, including sub-assemblies, and capital goods. It complements the semiconductor initiatives to create an integrated end-to-end electronics manufacturing ecosystem in India. 

2. Uniform consent guidelines amended under Air (Prevention and Control of Pollution) Act, 1981 and Water (Prevention and Control of Pollution) Act, 1974 

The amendments to the uniform consent guidelines streamline regulatory processes by extending validity of consent to operate until cancellation and reducing approval timelines for highly polluting industries. They also introduce deemed approvals for certain medium, small and micro enterprises (MSMEs) and shift site-specific requirements to expert authorities. The changes aim to improve ease of doing business while maintaining environmental oversight. 

3. Solid Waste Management Rules, 2026 notified

The Solid Waste Management Rules, 2026, expand applicability to rural areas and introduce mandatory 4 (four) stream waste segregation to improve efficiency and sustainability. They broaden the definition of bulk waste generators and impose stricter compliance obligations, including decentralised processing. A ‘cap-and-trade’ style extended bulk waste generator responsibility framework is also introduced to enhance accountability in waste management. 

4. Small Hydro Power Development Scheme (SHP Scheme) announced

The SHP Scheme has been approved for financial year 2026-31 with a USD 284 million outlay, and targets 1,500 (one thousand five hundred) megawatt of capacity, particularly in hilly and north-eastern regions. It provides central financial assistance and funding for project development and detailed project reports. The SHP Scheme is expected to drive investment, generate employment, and promote decentralised renewable energy. 

5. Bio-Pharma Shakti Scheme (Shakti Scheme)

With an outlay of USD 110 million over 5 (five) years, the Shakti Scheme seeks to strengthen India’s biopharmaceutical ecosystem and global competitiveness in biologics and biosimilars. It includes funding, infrastructure expansion, clinical trial networks, and regulatory strengthening. The Shakti Scheme aims to boost domestic manufacturing, innovation, and faster approvals while reducing import dependence.

Section B: General Updates

1. Foreign Exchange Management (Guarantees) Regulations, 2026

The Reserve Bank of India (RBI) has overhauled the cross-border guarantees framework by shifting from a prescriptive approval-based regime to a principle-based approach linked to the legality of the underlying transaction. The regulations introduce clear definitions and expressly permit inbound guarantees, improving regulatory clarity. A structured late submission fee mechanism has also been introduced to regularise reporting delays. 

2. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations 2026, consolidate export reporting into a single export declaration form and streamline timelines across goods, services, and software. They extend export realisation timelines (up to 18 (eighteen) months for INR trade) and remove rigid import payment timelines, aligning with contractual flexibility. The framework also permits set-off between goods and services transactions and places greater responsibility on authorised dealer banks. 

3. SEBI Notified the Listing Obligations and Disclosure Requirements (Amendment) Regulations, 2026 

The amendments strengthen corporate governance by formalising disclosure of special shareholder rights and simplifying investor service processes. They eliminate intermediaries like letters of confirmation and significantly reduce processing timelines. The threshold for high value debt listed entities has also been increased, easing compliance for mid-sized entities. 

4. Supreme Court clarifies the date of commencement of arbitral proceedings under section 21

The Supreme Court clarified that arbitral proceedings commence upon receipt of a notice invoking arbitration under section 21 of Arbitration and Conciliation Act, 1996 (Arbitration Act). This position applies uniformly across the Arbitration Act, resolving prior judicial divergence. The ruling reinforces procedural clarity and party autonomy in arbitration. 

5. Companies Compliance Facilitation Scheme, 2026 (CCFS)

The Ministry of Corporate Affairs has introduced a time-bound compliance window offering significant fee waivers for pending filings, dormant status, or voluntary strike-off. Eligible companies can avail up to 90% (ninety percent) waiver on additional fees and immunity from certain penalties. The CCFS is positioned as a final opportunity before stricter enforcement action. 

6. Press Note 3 of 2020 (Press Note 3) amended

The Government of India has refined foreign investment rules by clarifying beneficial ownership thresholds and introducing a 10% (ten percent) automatic route for certain investments from land-bordering countries. A fast-track 60 (sixty) day approval mechanism has been introduced for strategic sectors like semiconductors. The changes aim to balance national security with ease of investment and supply chain development.

Electronics components manufacturing scheme (ECM Scheme) 

In the Union Budget 2026-27, the Government of India announced key developments relating to the ECM Scheme. [1]  The update signals a policy push towards strengthening domestic electronics manufacturing and reducing import dependency. Key aspects include:

1. Increased budgetary allocation and policy support: Increased outlay of ECM Scheme, for electronics components manufacturing to USD 4.4 billion from previous budget of USD 2.75 billion, to enhance domestic component manufacturing.
2. Stronger policy focus on component level manufacturing: The ECM Scheme enhances allocation and directs it towards the electronics manufacturing capabilities by incentivising the production of critical components, sub-assemblies and capital goods. 
3. Alignment with semiconductor and strategic electronics initiatives: The ECM Scheme is positioned as a complementary framework to broader initiatives such as the ISM 1.0 and ISM 2.0. Together, these measures seek to create an end-to-end electronics manufacturing ecosystem, ranging from semiconductors to finished goods in India, enhancing its global competitiveness.

For further information on the ECM Scheme please refer to:  https://cms-induslaw.com/en/ind/publication/japan-newsletter-january-april-2025

Uniform consent guidelines amended under Air (Prevention and Control of Pollution) Act, 1981 and Water (Prevention and Control of Pollution) Act, 1974

On January 23, 2026, the Ministry of Environment, Forest and Climate Change (MoEFCC) has amended the  Control of Air Pollution (Grant, Refusal or Cancellation of Consent) Amendment Guidelines, 2026 and the Control of Water Pollution (Grant, Refusal or Cancellation of Consent) Amendment Guidelines, 2026 (together, 2025 Guidelines). [2]  The 2025 Guidelines provide procedures and criteria for obtaining consent to establish or operate industrial plants that may cause air or water pollution. Key changes include, amongst others:

• Validity of consent: As per the 2025 Guidelines, the consent to operate will remain valid until cancelled. Earlier, this was valid up to 5 (five) years. The amendments also allow the state governments to prescribe a one-time processing fee for the grant of consent to operate for 5 (five) to 25 (twenty-five) years. The processing time for granting consent to highly polluting (‘red’ category) industries has been reduced from 120 (one hundred and twenty) days to 90 (ninety) days. For micro and small enterprises located in notified industrial estates or areas, the consent to establish will be deemed granted upon the submission of a self-certified application. 
• Site requirements: The 2025 Guidelines provide for minimum distance to be maintained by the industries from water bodies and certain other sites. The 2025 Guidelines specify that these requirements will be imposed by the expert appraisal committee or the state board.

Solid Waste Management Rules, 2026 notified

On January 27, 2026, the MoEFCC has notified the Solid Waste Management Rules, 2026 (2026 Rules). The 2026 Rules have been framed under the Environment (Protection) Act, 1986 and replace the Solid Waste Management Rules, 2016 (2016 Rules). [3]  The 2026 Rules will come into effect on April 1, 2026. The Rules specify a framework for management of solid waste, and duties of various entities such as government departments, local bodies, industries, and commercial establishments. Key features of the 2026 Rules include:

1. Applicability: The 2016 Rules apply to urban local bodies, outgrowths in urban agglomerations, census towns, and industrial townships, and specified areas such as certain religious places, airports, and government establishments. The 2026 Rules extend applicability to rural local bodies.
2. 4 (four) stream segregation: The 2026 Rules introduce a mandatory 4 (four) stream segregation system requiring waste to be divided into wet, dry, sanitary, and special care categories. Wet waste is composted, dry waste is recycled through material recovery facilities (MRFs), sanitary waste is securely wrapped, and hazardous items like paint cans and medicines are handled by authorized agencies. This system improves efficiency and promotes environmentally responsible waste management.
3. Bulk waste generators: Under the 2016 Rules, bulk waste generators include entities with average waste generation of more than 100 (one hundred) kg per day (except residential societies). The 2026 Rules expand the definition of bulk waste generators to include entities with: (i) floor area of at least 20,000 (twenty thousand) square meters, or (ii) water consumption of at least 40,000 (forty thousand) litres per day. The 2026 Rules also cover residential societies. Bulk waste generators will have certain obligations such as: (i) registering with the concerned local body, (ii) making necessary arrangements for segregation of waste, and (iii) decentralised processing of wet waste. 
4. EBWGR certificates: The 2026 Rules have introduced a ‘cap-and-trade’ style mechanism for solid waste through introduction of extended bulk waste generator responsibility (EBWGR). Under this framework, bulk waste generators are held accountable for the waste they produce and will be required to: (a) process wet waste on-site wherever feasible; (b) obtain an EBWGR certificate if on-site processing is not possible; and (c) ensure environmentally sound collection, transportation, and processing of all waste generated.
5. Management of horticultural waste and agri-residue: The 2026 Rules have introduced that local bodies must facilitate establishment of facilities for collection and storage of agri-residue. The local bodies must ensure that such waste is not burned openly.

Small hydro power development scheme announced

On March 18, 2026, the Union Cabinet approved the Small Hydro Power (SHP) Development Scheme (SHP Scheme) for the period financial years 2026-27 to 2030-31, with a total outlay of USD 284 million for installation of SHP projects with an aggregate capacity of approximately 1,500 (one thousand five hundred) megawatts .[4]  The SHP Scheme aims to promote development of SHP projects (1 (one) to 25 (twenty-five) megawatts) across states, with a focus on hilly and north-eastern regions. Key aspects of the SHP Scheme include:

1. Central financial assistance (CFA): In north-eastern states and districts with international borders, CFA of USD 396,000 per megawatt or 30% (thirty percent) of project cost (whichever is lower), subject to a cap of USD 3.3 million per project, will be provided. In other states, CFA of USD 264,000 per megawatt or 20% (twenty percent) of project cost (whichever is lower), subject to a cap of USD 2.2 million per project will be accessible.
2. Allocation for project support: An amount of USD 278.5 million has been earmarked for implementation of SHP projects under the SHP Scheme.
3. Pipeline development: The SHP Scheme provides for preparation of detailed project reports for approximately 200 (two hundred) projects, with USD 3.3 million allocated for this purpose to support state and central agencies.
4. Investment and employment impact: The SHP Scheme is expected to generate an investment of approximately USD 1.65 billion in the small hydro sector and along with generating significant employment during construction and promoting decentralised renewable energy development in remote areas.

Container manufacturing assistance scheme announced

In the Union Budget 2026-27, the Government of India announced the launch of the Container Manufacturing Assistance Scheme (CMA Scheme) .[5]  The CMA Scheme is aimed at developing a globally competitive domestic container manufacturing industry with a budget allocation of USD 1.1 billion. The CMA Scheme is spread out over 5 (five) years and targets an annual domestic manufacturing capacity of approximately 1 (one) million twenty-foot equivalent units (TEUs) over the next decade. The CMA Scheme aims to support establishment of a globally competitive container manufacturing ecosystem in India, supporting the rapid growth of containerised cargo, which accounts for nearly two-thirds of the value of international trade.

Bio-pharma shakti scheme announced

In the Union Budget 2026-27, the Government of India announced the Bio-Pharma Shakti Scheme (Shakti Scheme) with an outlay of USD 110 million over a period of 5 (five) years, with the objective of strengthening the domestic biopharmaceutical sector and enhancing India’s global competitiveness in biologics and biosimilars. [6]  The Shakti Scheme is aimed at building a globally competitive ecosystem supporting affordable healthcare, and positioning India as a global bio-pharma manufacturing and innovation hub. Key benefits in the Shakti Scheme include:

1. Components of the Shakti Scheme: The Shakti Scheme aims to focus on the: (i) Biopharma Discovery Grant Fund & Discovery & Development Equity Fund; (ii) Biopharma-focused NIPER Network and National Biopharma Research and Development Network; (iii) India Clinical Trial Sites Network (1,000 (one thousand) accredited sites); (iv) Fermentation-based Bulk Drugs & Building Blocks Manufacturing Incentive; (v) Biopharma Delivery Devices & Packaging Manufacturing Ecosystem; (vi) Biosimilars & Emerging Biologics Manufacturing Initiative; and (vii) Regulatory Strengthening for Global-best Drug Review Standards and Approval Timeframes
2. Promotion of domestic manufacturing and reduced import dependence: The Shakti Scheme, similarly to Production Linked Incentive (PLI) Scheme for pharmaceuticals or the bulk drug park scheme, aims to support the domestic development and manufacturing of high-value biopharmaceutical products and medicines, reduce reliance on imports, and enhance India’s integration and competitiveness in the global biologics supply chain.
3. Strengthening human capital through institutional expansion: The initiative provides for the establishment of 3 (three) new National Institutes of Pharmaceutical Education & Research (NIPERs) and the upgradation of 7 (seven) existing NIPERs, with a view to addressing the increasing demand for specialised human resources in biopharma research, development, manufacturing, and regulatory functions.
4. Development of clinical research ecosystem: The Shakti Scheme envisages the creation of a large-scale clinical research ecosystem, with a focus on enhancing India’s capacity to conduct advanced and globally benchmarked clinical trials.
5. Regulatory strengthening and faster approvals: The Central Drugs Standard Control Organisation is proposed to be reinforced through the creation of a dedicated scientific review cadre, aimed at strengthening the regulatory framework and enabling faster, globally credible approvals, thereby reducing approval timelines.

Foreign Exchange Management (Guarantees) Regulations, 2026

On January 12, 2026, the RBI notified the Foreign Exchange Management (Guarantees) Regulations, 2026 (New Regulations), replacing and superseding Foreign Exchange Management (Guarantees) Regulations, 2000 (Erstwhile Regulations).[1] Key provisions include:

1. Regulatory shift: The New Regulations provide that a person resident in India may be a party, whether as a principal debtor, surety or creditor, to a guarantee involving a person resident outside India only in accordance with the conditions prescribed thereunder. Under the Erstwhile Regulations, there was a general restriction on guarantees involving a person resident outside India. However, the regulations carved out specific situations in which such guarantees were permitted without prior approval of RBI, which included, among others, guarantees linked to structured obligations under the external commercial borrowing framework, guarantees issued by authorised dealer (AD) banks, and certain guarantees by other resident entities. Transactions falling outside these specified categories generally required prior RBI approval, resulting in a relatively transaction-specific and prescriptive regulatory approach.

In contrast, the New Regulations adopt a more principle-based framework, the regulations generally allow residents to participate in cross-border guarantees provided that: (a) the underlying transaction is not prohibited under the Foreign Exchange Management Act, 1999, and (b) the parties satisfy the lending and borrowing eligibility conditions prescribed under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. Accordingly, the permissibility of a guarantee is now largely linked to the legality of the underlying cross-border financial arrangement and the eligibility of the parties involved, rather than being confined to a narrow set of predefined categories. 

ii. Clarity in definitions: The Erstwhile Regulations lacked detailed definitions, leaving key terms such as ‘guarantee’ and ‘surety’ open to interpretation. The New Regulations address this by expressly defining ‘guarantee’, ‘surety’, ‘principal debtor’, and ‘creditor.’ Notably, ‘guarantee’ is defined broadly to include any contract to discharge a debt, obligation or other liability (including a portfolio of liabilities) upon default by the principal debtor and expressly includes counter-guarantees.

iii. Late submission fee for delayed reporting: Under the Erstwhile Regulations, there was no explicit provision for regularising delayed or missed reporting of guarantees through a structured late submission fee mechanism. According to the New Regulations, a person resident in India who fails to comply with the reporting requirements may regularise the delay by completing the required reporting and paying a late submission fee. The late submission fee is calculated as USD 82.5 plus 0.025% (zero point zero two five percent) of the amount involved, multiplied by the period of delay (rounded to the nearest month), with the final amount rounded up to the nearest hundred.

Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026

The RBI, on January 13, 2026, notified the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (2026 Regulations), replacing the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015 (Existing Regulations), effective from October 01, 2026. [8]  Key changes include:

1. Uniform reporting: The 2026 Regulations consolidate the declaration requirements for exports of goods, services, and software into a single export declaration form (EDF), replacing the earlier framework under which an EDF was required for export of goods and a ‘SOFTEX’ form for software exports. Under the 2026 Regulations, software is treated as a form of ‘service’.
2. Timeline for submission of EDF: 

iii. Import payment and export realizations: The earlier 6 (six) month timeline for import payments has been removed, and payments must now follow the contractual terms agreed between parties. For export proceeds, the realisation period has been extended from 9 (nine) months to 15 (fifteen) months (from the date of shipment for goods and the date of invoice for services), giving businesses more time to receive payments. For exports invoiced or settled in INR, the realisation period has been further extended to 18 (eighteen) months to encourage INR denominated trade.

iv. Import and export transactions set-off: Under the Existing Regulations, set-off of payments pertaining to goods against services is not allowed. However, set-off of export receivables for goods against import payables for services, and vice versa, will now be permitted under the 2026 Regulations. Such set offs may be carried out with the same overseas counterparty or its group or associate companies, within the prescribed export realisation period or any extended period approved by the authorised dealer bank.

v. Responsibilities of authorised dealer banks: Under the 2026 Regulations, greater responsibility is placed on the authorised dealer banks based on their internal policies and assessment of the bona fides of each transaction. The 2026 Regulations direct the authorised dealer banks to formulate an internal policy and standard operating procedures for handling trade transactions and reporting them.

SEBI Notified the Listing Obligations and Disclosure Requirements (Amendment) Regulations, 2026 

On January 22, 2026, SEBI notified the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2026 (LODR Amendment), introducing a series of targeted reforms to the existing disclosure and governance framework applicable to listed entities. [9]  The amendments are aimed at enhancing the quality of corporate governance, strengthening transparency in shareholder rights, and streamlining investor servicing processes. Key amendments are:

1. Enhanced disclosure and governance of special shareholder rights: The LODR Amendment introduces a formalised framework governing the disclosure of special rights granted to certain shareholders. Listed entities are now required to ensure that such rights are transparently disclosed and are subject to periodic approval by shareholders, thereby reinforcing equitable treatment and preventing disproportionate control structures.
2. Simplification of investor service request processes: The LODR Amendment significantly streamlines procedures relating to investor service requests, including issuance of duplicate share certificates, transmission of securities, and related processes. The amendments reduce procedural complexity and reliance on documentation, thereby improving efficiency in handling such requests.
3. Removal of requirement for letters of confirmation (LOC): The requirement to issue LOCs in several cases has been largely dispensed with. Registrars and transfer agents (RTAs) are now permitted to directly credit securities to the demat accounts of investors upon completion of necessary due diligence, eliminating intermediate steps in the process.
4. Reduction in processing timelines for investor requests: As a consequence of the procedural simplifications, the timeline for processing investor service requests is expected to reduce significantly from approximately 150 (one hundred and fifty) days to around 30 (thirty) days, thereby improving investor experience and reducing associated risks.
5. Revision of threshold for high value debt listed entities: The amendments increase the identification threshold for high value debt listed entities from USD 110 million to USD 550 million. This change is expected to provide compliance relief to mid-sized non-banking financial companies and asset reconstruction companies, while aligning governance standards with those applicable to equity-listed entities.

SEBI introduces revised reporting framework for Alternative Investment Funds (AIFs)

The SEBI has, vide circular dated March 4, 2026, introduced a revised regulatory reporting framework for AIFs, aimed at streamlining reporting requirements and improving regulatory oversight. The circular provides:

1. Standardised reporting requirement: AIFs are now required to submit a detailed annual activity report capturing operational, financial, and investor-related data, within 30 (thirty) calendar days from the end of March, every financial year. Further, AIFs are also required to file a quarterly activity report, within 15 (fifteen) days from the end of each quarter, except for the quarter ending in March each year. 
2. Digitisation of compliance processes: Reporting is required [SC1] to be undertaken through SEBI’s online intermediary portal, enhancing regulatory efficiency and reducing manual compliance burdens.
3. Enhanced regulatory visibility: The framework enables SEBI to monitor fund activities, investment trends, and compliance in a more granular manner.

Supreme Court clarifies the date of commencement of arbitral proceedings under section 21

In Regenta Hotels Pvt. Ltd. v. Hotel Grand Centre Point & Ors., [10]  the Supreme Court of India authoritatively reaffirmed the precise moment at which arbitral proceedings commence. Arbitration proceedings commence on the date the respondent receives a notice invoking arbitration under section 21 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). This definition applies uniformly across all provisions of the Arbitration Act, not merely for the purposes of limitation under section 43, unless expressly excluded by a specific provision. Prior to this ruling, there was divergent judicial opinion on whether arbitration commences when a petition for appointment of an arbitrator is filed before a court, or when arbitration is formally invoked by notice. The Supreme Court further held that the legislature deliberately de-linked commencement from judicial proceedings in order to ensure clarity and promote party autonomy. 

Person ineligible under section 12(5) cannot nominate another arbitrator

In Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, [11]  the Supreme Court held that a person ineligible to be an arbitrator due to compromised independence or impartiality as per section 12(5) read with the seventh schedule to the Arbitration Act, cannot validly nominate or appoint another person as arbitrator. The Supreme Court affirmed that the principle of equal treatment under section 18 applies not only to arbitral proceedings but also to the procedure for constituting the arbitral tribunal. Any unilateral appointment by one party where that party has exclusive power to appoint a sole arbitrator violates impartiality and neutrality. The ruling further confirmed that an arbitrator's mandate is automatically terminated when they are found ineligible under section 12(5) of the Arbitration Act, and that an aggrieved party may approach the Courts under sections 14 and section 15 of the Arbitration Act for appointment of a substitute, or under section 34 of the Arbitration Act to set aside the resulting award. 

In Union of India & Ors. v. Larsen & Toubro Limited, [12]  the Supreme Court set aside the grant of pre-award (pendente lite) interest by the arbitral tribunal where the contract expressly prohibited such interest. Under section 31(7)(1) of the Arbitration Act, an arbitral tribunal cannot award pre-award interest in the form of ‘compensation’ when the contract expressly bars such award. In this case, the arbitral tribunal had awarded USD 608,300 to Larsen and Toubro, including amounts resembling interest despite clause 64(5) of the contract prohibiting interest until the date of the award. The Supreme Court ruled that this award was impermissible and set aside the pre-award interest.

Limited scope of interference with arbitral awards

In Municipal Corporation of Greater Mumbai v. M/s R.V. Anderson Associates Ltd., [13]  the Supreme Court upheld the dismissal of a challenge under section 34 of the Arbitration Act, reaffirming the limited scope of interference with arbitral awards. The Supreme Court rejected the appellant’s challenge on jurisdictional grounds and upheld the arbitral award, emphasising that courts cannot interfere unless the award suffers from patent illegality or falls within the narrow statutory grounds under sections 34 and section 37 of the Arbitration Act. The judgment reinforces the principle that arbitral awards are final and binding, and judicial review cannot be used to revisit findings on merits. 

Union Budget 2026–27 and the new Income-tax Act, 2025 to come into force from April 1, 2026

On February 1, 2026, Union Budget 2026–27 (Budget) was presented in the Parliament. The key direct tax announcement in the Budget is the introduction of the Income Tax Act, 2025 (New Act), which will replace the Income Tax Act, 1961 with effect from April 1, 2026 (i.e., from tax year 2026–27). The New Act comprehensively modernises India's direct tax framework with simplified language, restructured provisions, and redesigned forms, although the detailed rules and forms under the New Act are to be notified gradually over subsequent months. The key direct tax proposals in the Budget include:

1. No change in personal income tax slabs or rates for the assessment year 2026–27: These remain unchanged from the previous year. The tax-free threshold under the new tax regime was also retained at the levels announced in the Union Budget for 2025-2026.
2. Extended deadline for revised returns: The due date for filing revised income tax returns has been extended from December 31 to March 31 of the relevant assessment year, subject to payment of a nominal late fee.
3. Staggered filing deadlines: Salaried taxpayers must now file their returns by July 31, while non-audit business taxpayers have until August 31.
4. Minimum alternate tax (MAT) reduction: MAT is proposed to be reduced from 15% (fifteen percent) to 14% (fourteen percent) with effect from tax year 2026–27.
5. Revised buyback taxation: Buyback proceeds for all categories of shareholders will be taxed as capital gains (not as dividend in the hands of the company), with promoters bearing an additional buyback tax resulting in an effective rate of 22% (twenty-two percent) for corporate promoters and 30% (thirty percent) for non-corporate promoters. This change applies from March 1, 2026.
6. Foreign Assets Disclosure Scheme, 2026: A one-time, 6 (six) month voluntary disclosure window has been introduced for eligible small taxpayers including students, young professionals, and returning non-resident Indians, which aims to regularise limited foreign assets that were not previously disclosed. For assets and income not exceeding USD 110,000, taxpayers must pay 30% (thirty percent) of the undisclosed value plus 100% (one hundred percent) additional tax; for cases where foreign assets were not declared (before becoming a resident), a fee of USD 1,100 applies where the default does not exceed USD 550,000.
7. Safe harbour for IT services: The revenue threshold for availing safe harbour pricing for information technology (IT) and IT-enabled services (including software development, KPO, and contract research and development relating to software development, now clubbed as a single 'IT Services' category) is enhanced from USD 33 million to USD 220 million. An automated, rule-driven approval process for safe harbour elections is also introduced, valid for up to 5 (five) consecutive years.
8. Tax holiday for foreign cloud service providers: Foreign companies providing cloud services to global customers using data centre infrastructure located in India are eligible for a tax holiday on India-sourced income until 2047, with a safe harbour of 15% (fifteen percent) on cost for related-party data centre arrangements.
9. Portfolio investment scheme liberalisation: persons resident outside india (PROI) may now invest in listed Indian equities through the portfolio investment scheme up to a limit of 10% (ten percent) of the paid-up share capital of an Indian company, a significant expansion of the existing framework.
10. Tax holiday for International Financial Services Centre (IFSC): Tax holiday extended from 10 (ten) out of 15 (fifteen) tax years to 20 (twenty) out of 25 (twenty-five) tax years, with a post-holiday tax rate of 15% (fifteen percent) in the IFSC, reinforcing India's position as a global financial hub.

Companies Compliance Facilitation Scheme 2026 (CCFS)

On February 24, 2026, the Ministry of Corporate Affairs (MCA) issued a circular introducing the Companies Compliance Facilitation Scheme, 2026 (CCFS-2026), operative for a strict, non-extendable 3 (three) month window between April 15, 2026, and July 15, 2026. [14]  The CCFS-2026 has been framed as a relief measure for MSMEs, one person company(s), and other entities which were previously burdened by the uncapped USD 1.1 per day additional fee for any missed statutory filings, since July 1, 2018. The CCFS-2026 provides eligible companies with 3 (three) options:

1. Pending annual filings at 10% (ten percent) of total additional fees: Companies with overdue statutory filings can file pending e-forms during the CCFS-2026 window by paying the normal filing fee plus only 10% (ten percent) of the applicable additional fees, effectively granting a 90% (ninety percent) waiver on late fees.
2. Dormant company status at 50% (fifty percent) of normal fee: Inactive companies wishing to retain corporate registration with minimal ongoing compliance obligations can apply for dormant status under section 455 of the Companies Act, 2013 by filing e-Form MSC-1, with 50% (fifty percent) of the prescribed filing fee payable.
3. Voluntary strike-off at 25% (twenty-five percent) of normal fee: Companies seeking voluntary strike-off under section 248 of the Companies Act can file e-Form STK-2 during the CCFS-2026 period and will be required to pay only 25% (twenty-five percent) of the standard filing fee.

Companies filing within the window also receive immunity from penal proceedings under sections 92 and 137 of the Companies Act, 2013, subject to no adjudication order having been passed prior to the CCFS-2026. The CCFS-2026 excludes companies already served final strike-off notices, those that have applied for strike-off or dormant status, dissolved companies, and vanishing companies. The MCA has indicated this is a final opportunity, with Registrars of Companies directed to initiate enforcement action against all remaining defaulters upon the CCFS-2026’s conclusion.

Press Note 3 of 2020 (Press Note 3) amended

On March 10, 2026, the Government of India introduced key refinements to its foreign investment and manufacturing framework, with a particular focus on electronics and semiconductor supply chains. The amendments to Press Note 3, [15]  inter alia, provide for the following:

1. Clarification of beneficial ownership thresholds: Beneficial ownership has now been aligned with the framework under the Prevention of Money Laundering Act, 2002, providing a clear and uniform benchmark for determining ownership and control in cross-border investments. 
2. Introduction of 10% (ten percent) threshold for automatic route eligibility: Investments involving up to 10% (ten percent) beneficial ownership from land-bordering jurisdictions may proceed under the automatic route (subject to no control rights), thereby easing investment inflows into electronics and semiconductor sectors. 
3. Time-bound approval mechanism: A 60 (sixty) day fast-track approval route has been introduced for investments in strategic sectors, including semiconductor manufacturing and electronic components, improving deal certainty and execution timelines. 
4. Enhanced reporting obligations: Investors are required to disclose beneficial ownership details to Department for Promotion of Industry and Internal Trade of India, strengthening regulatory oversight without materially increasing friction. 

For more details on the amendment to the Press Note 3 please refer: https://cms.law/en/sgp/legal-updates/decoding-investment-into-india-for-land-border-countries

1. Maruti Suzuki India Limited and Toyota Kirloskar Motor Pvt. Ltd. launched their respective battery electric vehicles in India in February 2026, the e-VITARA and the Urban Cruiser EV (also referred to as the Urban Cruiser eBella). The e-VITARA is developed on Heartect-e electric platform, built jointly by Toyota Motor Corporation and Daihatsu Motor Co., Ltd. While the e-VITARA is manufactured at Suzuki Motor Gujarat Private Limited's Gujarat facility, the Toyota variant is produced under the broader Toyota-Suzuki global manufacturing collaboration, with the Urban Cruiser EV also earmarked for export markets.
2. Japanese industrial materials manufacturer Proterial Ltd. (formerly Hitachi Metals) announced plans to explore the manufacture of rare-earth magnets and related components in India. These components are widely used in electric vehicle motors and other high-efficiency industrial applications.
3. During a visit by the chief minister of Uttar Pradesh to Japan in February 2026, several MoUs were signed with Japanese companies for investments in manufacturing and technology sectors. Participating companies included Kubota Corporation, Japan Aviation Electronics Industry Ltd., Nagase & Co., Ltd., and Seiko Advance Ltd. The proposed investments relate to sectors such as agricultural machinery, automotive components, electronics manufacturing, and industrial materials.  Separately, the Uttar Pradesh government announced plans to develop a dedicated ‘Japan City’ industrial cluster in the Yamuna Expressway Industrial Development Authority region to facilitate Japanese investment and manufacturing activity. 
4. Suzuki Motor Corporation has announced plans to invest approximately USD 7.7 billion in India over the next 5 (five) to 6 (six) years, with the Gujarat facility positioned as a global production hub for electric vehicles and exports. The investment plan also includes expanding India’s annual production capacity to approximately 4 (four) million vehicles by financial year 2030–31.