New Delhi: To enhance trade relations with China, the government has introduced significant relaxations on investments. Foreign companies with a Chinese stake of up to 10% are now permitted to invest in India via the automatic route, and the relevant regulations will be announced under the Foreign Exchange Management Act (FEMA). An official familiar with the situation mentioned that these changes will take effect once the notification is released.
Earlier in March, the Union Cabinet approved changes to Press Note 3, which was issued by the Department for Promotion of Industry and Internal Trade (DPIIT) in 2020. According to the revised provisions, foreign companies with a stake from China or Hong Kong of up to 10% can invest in sectors where foreign direct investment (FDI) is allowed through the automatic route. However, this exemption does not extend to companies registered in China, Hong Kong, or any other countries that share a land border with India.
The government has also determined that FDI proposals in sectors like capital goods, electronic capital products, electronic components, polysilicon, and ingot-wafers will be processed within 60 days. A committee of secretaries, led by the Cabinet Secretary, will identify these sectors. Jai Prakash Shivhare, Joint Secretary of DPIIT, mentioned that the Department of Economic Affairs (DEA) will soon issue a notification under FEMA, and some technical aspects of this process are currently being finalized.
Shivhare further noted that the DPIIT is pinpointing sub-sectors where applications will be processed within 60 days. Additionally, older applications pending under Press Note 3 are under review, which may not necessitate government approval. He also highlighted that total FDI in the country rose to $88.29 billion between April 2025 and February 2026, up from $80.61 billion during the same timeframe in 2024-25. Furthermore, net FDI in the country increased to $6.26 billion from $959 million in 2024-25.
