Easing of 10% rule on Chinese stake attracts FDI worth ₹4,896 crore | Economy & Policy News

India received foreign direct investment (FDI) worth Rs 4,896 crore in 29 projects as of August 20 after the government in May eased FDI norms under Press Note 2 of 2026 that allowed investment, without government approval, from entities having non-controlling land-bordering country (LBC) ownership of up to 10 per cent.

      Previously, investments from entities based in any other country having beneficial ownership of even 1 per cent by companies based in land-bordering countries were subject to government approval under Press Note 3 of 2020.

In 2020, India had mandated government approval for all investments from entities based in land-bordering countries, as well as entities based out of any other country that had ownership by companies based in land-bordering countries. But this had been a long-standing concern among investors seeking greater clarity and ease of investment.

The Union Cabinet approved the eased norms in March, and the Department for Promotion of Industry and Internal Trade (DPIIT) notified them in May to allow FDI through the automatic route from entities based in any other country with non-controlling ownership of less than 10 per cent by companies based in land-bordering countries. However, government approval would be required if an LBC company owns a controlling stake in the investment firm.

FDI proposals from entities based in nations that share a land border with India remain subject to government approval. The rule applies to investors based in China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan. But the Union Cabinet has also approved a 60-day window for such approvals in select sectors to expedite the process.

The easing of norms was part of New Delhi’s broader effort to make India an attractive FDI destination. Recently, the government also eased FDI norms for inventory-based e-commerce firms. Simultaneously, India has initiated work towards a more predictable FDI policy and is likely to introduce an updated model Bilateral Investment Treaty (BIT) soon.

The effort comes at a time when data showed a sharp slowdown in net FDI inflows into India over the past four years, falling from an annual average of around $40 billion between FY20 and FY22 to $6.95 billion in FY26.