India Approves One Chinese FDI Proposal Under Screening Process

India approved one Chinese Foreign Direct Investment proposal worth ₹1 crore during financial year 2025-26, while 13 proposals from Hong Kong were cleared for ₹610.42 crore in the same period. The approvals were processed under the government route, which requires prior approval for specified foreign investments in India.

Foreign Direct Investment and Approval Routes

Foreign Direct Investment, or FDI, refers to investment by a foreign entity in an Indian business through equity participation, control, or ownership. India uses two broad routes for FDI, namely the automatic route and the government route, and the latter requires screening by the Union government.

Press Note 3 and Land-Border Screening

Press Note 3 was issued in April 2020 by the Department for Promotion of Industry and Internal Trade. It requires prior government approval for investments from countries that share a land border with India, including China, Pakistan, Nepal, Bhutan, Myanmar, Bangladesh, and Afghanistan. The policy was introduced during the COVID-19 period to regulate acquisitions and takeovers of Indian companies by investors from land-border countries. The screening mechanism applies to direct and indirect investment proposals that fall within the notified framework.

Recent Policy Change

On 10 March 2026, amendments to Press Note 3 allowed investors from land-border countries with non-controlling beneficial ownership of up to 10% to invest through the automatic route. The relaxation does not apply to entities registered in China, Hong Kong, or any other country sharing a land border with India. During FY 2025-26, India approved 63 FDI proposals worth ₹10,292.67 crore under the government route. In FY 2024-25, India also approved only one Chinese FDI proposal, valued at ₹28.71 crore.

Important Facts for Exams

• Press Note 3 was issued in April 2020 by the Department for Promotion of Industry and Internal Trade.
• India requires prior government approval for FDI from countries sharing a land border with India.
• Hong Kong is treated separately in FDI screening data, with 13 approvals worth ₹610.42 crore in FY 2025-26.
• China accounted for 0.32% of India’s total FDI equity inflows between April 2000 and March 2026.

FDI Inflows from China

China contributed $2.51 billion, or ₹16,162.25 crore, to India’s total FDI equity inflows between April 2000 and March 2026. This share formed 0.32% of India’s cumulative FDI equity inflows in the period.