India Approves Chinese FDI Proposals Under Government Route in FY 2025-26

Key Facts

• In FY 2025-26, India approved one Chinese FDI proposal worth ₹71 crore under the government route, which requires prior approval.
• During the same period, 13 proposals from Hong Kong were approved, totaling ₹610.42 crore.
• Press Note 3 (April 2020), issued by the Department for Promotion of Industry and Internal Trade (DPIIT), mandates prior government approval for FDI from countries sharing a land border with India.
• The countries covered include China, Pakistan, Nepal, Bhutan, Myanmar, Bangladesh, and Afghanistan.
• On 10 March 2026, amendments to Press Note 3 allow investors from these countries with up to 10% non-controlling beneficial ownership to invest under the automatic route, except for entities registered in China, Hong Kong, or any other land-border country, which continue to require government approval.
• Between April 2000 and March 2026, China contributed $2.51 billion (₹16,162.25 crore) to India’s total FDI equity inflows, forming approximately 0.32% of cumulative inflows.
• In FY 2025-26, India approved a total of 63 FDI proposals worth ₹10,292.67 crore under the government route.
• In FY 2024-25, India approved only one Chinese FDI proposal worth ₹28.71 crore.

Background & Context

Foreign Direct Investment (FDI) refers to investment by a foreign entity in an Indian business through equity participation, control, or ownership. India accepts FDI primarily via two routes: the automatic route and the government route. The government route mandates prior screening and approval by the Union government for investments considered sensitive or involving countries with strategic or security concerns.

In April 2020, the Department for Promotion of Industry and Internal Trade issued Press Note 3 as a policy response during the COVID-19 pandemic to regulate acquisitions and takeovers of Indian companies by entities from countries sharing a land border with India. The measure aims to prevent opportunistic takeovers under conditions of economic disruption and heightened geopolitical tensions. The screening applies to both direct and indirect investment proposals from such countries.

In March 2026, limited relaxation was introduced to permit non-controlling beneficial ownership (up to 10%) from countries sharing land borders via the automatic route; however, investment by entities registered in China, Hong Kong, or any other land-border country continues to require government approval.

Why This Matters for Exams / Exam Relevance

Understanding amendments in India's FDI policy, especially the significance of Press Note 3 (2020) and its 2026 revisions, is important for exams focusing on current affairs, economic policy, and international relations. Key elements frequently tested include the rationale behind the screening process, the countries involved, the nature of the government route, and quantitative data related to FDI inflows from China.

These policies reflect India’s strategic economic sovereignty and national security considerations in foreign investments, which are crucial for a nuanced understanding of India’s economic diplomacy.

Points to Remember

• Press Note 3 issued in April 2020 by DPIIT mandates prior government approval for FDI from countries sharing a land border with India.
• The government route applies to investments from China, Hong Kong, and other such countries due to security and control concerns.
• In FY 2025-26, India approved only one Chinese FDI proposal worth ₹71 crore under the government route.
• In the same period, 13 FDI proposals from Hong Kong, worth ₹610.42 crore, were approved.
• Amendments on 10 March 2026 allowed investments up to 10% non-controlling beneficial ownership via automatic route from land-border countries, but this relaxation excludes entities from China and Hong Kong.
• China’s total FDI inflow into India from April 2000 to March 2026 amounted to $2.51 billion (₹16,162.25 crore), accounting for roughly 0.32% of cumulative FDI equity inflows.