Government to Notify New FDI Guidelines Allowing Up to 10% Stake for Foreign Companies in Chinese Firms

Government to Eases Foreign Direct Investment Norms for Overseas Companies

The government is set to notify the decision to ease foreign direct investment (FDI) norms for overseas companies with up to 10 per cent stake in Chinese companies under the Foreign Exchange Management Act (FEMA) law. According to a senior government official, the notification will be made soon, after which the changes will come into effect.

The easing of FDI norms is a part of the amendments approved by the Union Cabinet in March in the press note (PN) 3 of 2020. Under the new rules, foreign companies with a Chinese shareholding of up to 10 per cent will be eligible to invest in India under the automatic route across sectors. However, the relaxed FDI rules will not apply to entities registered in China/Hong Kong or other countries sharing land borders with India.

The government has also decided to process FDI proposals in specified sectors/activities of manufacturing within 60 days. The sectors include capital goods, electronic capital goods, electronic components, polysilicon, and ingot-wafer or any other sector/activity added by the committee of secretaries headed by the Cabinet Secretary. The Department for Promotion of Industry and Internal Trade (DPIIT) has notified these changes, but the Department of Economic Affairs (DEA) has not yet notified them.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

According to DPIIT Joint Secretary Jai Prakash Shivahare, the DEA will issue the notification under FEMA, which will be notified very soon. The department is working to identify sub-sectors whose applications will be processed within 60 days.

FDI Inflows Reach USD 88.29 Billion

The total FDI, which includes reinvested earnings, has touched USD 88.29 billion during April-February 2025-26. This is a significant increase from USD 80.61 billion in 2024-25. The net FDI into the country has increased to USD 6.26 billion during April-February 2025-26 against USD 959 million in the full fiscal year of 2024-25.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The DPIIT Secretary Amardeep Singh Bhatia said that the total foreign direct investment (FDI) is likely to reach USD 90 billion in the full 2025-26 fiscal. He attributed the increase in FDI to reform measures, free trade agreements, and fast-growing economic growth.

Invest India Facilitates Grounding of 60 Projects

Invest India, the national investment Promotion and facilitation agency, has facilitated the grounding of 60 projects worth over USD 6.1 billion during 2025–26. These investments span 14 states and are estimated to generate more than 31,000 potential jobs. About 42 per cent of the total grounded investment value originates from European nations.

The continued participation from the United States, Japan, South Korea, Australia, and other key source markets affirms broad-based international confidence in India's regulatory environment and manufacturing capabilities. Emerging source nations such as Brazil, New Zealand, and Canada indicate diversification in the country's investment base.

Key Sectors Driving Investments

Invest India MD and CEO Nivruti Rai said that chemicals, pharmaceuticals, biotechnology, and food processing sectors account for about 65 per cent of grounded investments, driven by high-value projects. The agency is focusing on 11 countries for attracting greater inflows.