Department for Promotion of Industry and Internal Trade (DPIIT) eases FDI rules for firms with up to 10% Chinese shareholding.

Key facts

• Department for Promotion of Industry and Internal Trade (DPIIT) notified that overseas companies with Chinese shareholding up to 10% can invest in India through the automatic route, subject to sectoral limits and conditions.
• The relaxation does not apply to entities incorporated in China, Hong Kong or other countries sharing land borders with India.
• Earlier, foreign firms with any shareholding link to such nations required mandatory government approval for investments across sectors.
• The term 'beneficial owner' will carry the same meaning as defined under Section 2(1)(fa) of the Prevention of Money-laundering Act (PMLA), 2002.
• Under PMLA rules, controlling ownership interest refers to entitlement to more than 10% of shares, capital or profits in a company.
• Investments from entities having any direct or indirect ownership link with citizens or firms from land-bordering nations will have to follow additional reporting requirements under the standard operating procedure prescribed by DPIIT.
• The decision to ease the norms was cleared by the Union Cabinet last week.
• The government had earlier tightened the FDI policy through Press Note 3 (2020) on April 17, 2020, to prevent opportunistic takeovers of Indian companies during the Covid-19 pandemic.
• DPIIT indicated that proposals for FDI from these countries in specified sectors will be considered under an expedited approval mechanism with a 60-day timeline.
• Countries sharing land borders with India include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.
• China currently ranks 23rd in FDI equity inflows into India, accounting for 0.32% share, or USD 2.51 billion, between April 2000 and December 2025.