Government Reviewing Policy to Ease Foreign Direct Investment Norms for Chinese Investors

Easing of Norms for Foreign Direct Investment from China Under Review

The Indian government is considering relaxation of rules for foreign direct investment from China, as part of efforts to balance foreign investment with strategic security concerns. According to a senior government source, the government is reviewing Press Note 3 (PN-3) policy to address this issue.

PN-3 policy, which requires foreign companies with shareholders from countries sharing a land border with India to obtain government approval for investments, has been the subject of inter-ministerial consultations. However, a proposal to ease these norms has not yet been finalised by the Union Cabinet, which met on Tuesday.

The government is exploring ways to utilise China's excess production capacity and capital in non-sensitive sectors in India, such as infrastructure projects like highways and bridges. However, strategic sectors critical to national security and industrial policy will remain protected from foreign investment.

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China's share of total FDI equity inflow in India from April 2000 to December 2025 stands at 0.32% ($2.51 billion), ranking 23rd among all countries. The government's review of PN-3 policy aims to strike a balance between encouraging foreign investment and safeguarding national security interests.