Legal & Regulatory Alert (17 March 2026)

17 March 2026

INDIA–MALAYSIA RELATIONS

Prime Minister Modi's official visit to Malaysia in early February 2026 resulted in the signing of 11 cooperation agreements covering semiconductors, disaster management, anti-corruption, security and TVET. Both leaders also committed to accelerating the use of the Ringgit and Rupee for bilateral trade settlement, with a shared goal of exceeding bilateral trade of USD 18.59 billion.

GENERAL UPDATES

India–GCC Free Trade Agreement - India and the GCC have signed a joint statement commencing FTA negotiations, aimed at fostering trade, investment and job creation.

India–France DTAA Protocol - A protocol amending the 1992 India–France Double Taxation Avoidance Convention has been signed. Key changes include deletion of the Most-Favoured-Nation clause, a revised definition of "Fees for Technical Services", a Service Permanent Establishment clause, reduced withholding tax on dividends, and incorporation of BEPS Multilateral Instrument provisions.

Legal Metrology (Packaged Commodities) Amendment Rules 2026 - From 1 July 2026, all e-commerce entities selling imported products in India must display the country of origin in a searchable and sortable filter. Exporters selling via Indian e-commerce platforms should prepare for this requirement.

Drug Regulatory Reforms - The CDSCO has revised its drug testing norms, allowing laboratory testing to commence immediately upon filing (instead of after scrutiny). The New Drugs and Clinical Trials (Amendment) Rules 2026 further reduce the test licence timeline from 90 to 45 days. Both changes take effect from 1 June 2026.

CORPORATE LAW UPDATES

FDI Policy: Land-Border Countries - The Union Cabinet has approved amendments to India's FDI framework. Investments from land-bordering country entities holding non-controlling beneficial ownership of up to 10% are now permitted via the automatic route (subject to sectoral caps and DPIIT disclosure). A definitive 60-day approval timeline has been introduced for specified manufacturing sectors.

New Income Tax Act 2025 - The Income Tax Act, 2025 takes effect on 1 April 2026, replacing the 1961 Act. The new Act is revenue-neutral but simplifies the law significantly, reducing its volume by approximately 50% and replacing the previous year/assessment year framework with a single "Tax Year" concept.

SEBI SWAGAT-FI Framework - Effective 1 June 2026, SEBI's Single Window Automatic and Generalised Access for Trusted Foreign Investors framework streamlines onboarding for Foreign Portfolio Investors and Foreign Venture Capital Investors, with 10-year KYC validity and integrated depository registration. Malaysian institutional investors should assess eligibility ahead of the effective date.

Startup Definition Revised - The DPIIT has raised the turnover limit for "Startups" to INR 200 Crore (from INR 100 Crore) over 10 years. A new "Deep Tech Startup" category has also been introduced with a 20-year period and turnover limit of INR 300 Crore.

ECB Framework Consolidated - The RBI has consolidated all External Commercial Borrowings provisions under the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026. Forms ECB-1 and ECB-2 have been revised with enhanced disclosure requirements.

Companies Compliance Facilitation Scheme 2026 (CCFS-2026) - From 15 April to 15 July 2026, inactive or defaulting companies may complete pending filings or opt for dormant status/strike-off at reduced fees.

EMPLOYMENT LAW UPDATES

Several Indian states have amended their Shops and Commercial Establishments legislation, increasing permissible daily working hours to 10 hours (Haryana, Gujarat and Rajasthan), with corresponding revisions to overtime limits and employee welfare provisions. Uttarakhand has gone further, permitting 24×7 operations with no fixed opening or closing hours.

Both Houses of Parliament have also passed the Industrial Relations Code (Amendment) Bill 2026, which clarifies that the Industrial Relations Code, 2020 replaces and repeals the Trade Unions Act 1926, the Industrial Employment (Standing Orders) Act 1946 and the Industrial Disputes Act 1947 with effect from 21 November 2025.

ARBITRATION UPDATE

The Delhi High Court reaffirmed that the scope of judicial interference with an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 is strictly limited to the grounds enumerated therein - a court may not interfere merely because an alternative view is possible. This continues India's pro-arbitration judicial trend.

HOW CAN THE INDIA DESK ASSIST YOU? 
 
Skrine’s India Desk aims to support Indian companies in Malaysia and Malaysian companies in India. We advise on investments, contracts, regulatory compliance and disputes. We work closely with leading Indian law firms and consultants to give clients clear and practical advice. Please contact us if you would like to discuss how these developments affect your business.
 
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact Skrine’s India Desk (indiadesk@skrine.com).