The Government of India has relaxed foreign direct investment (FDI) rules for countries that share a land border with India, including China. The move is aimed at attracting more investment while keeping safeguards in place for sensitive sectors.
Under the revised rules, investors from neighbouring countries can now invest up to 10% in Indian companies through the automatic route, as long as the investment does not give them control over the company. Earlier, any investment from these countries required prior approval from the government, even if the stake was small.
The earlier restrictions were introduced in 2020 during the COVID-19 pandemic. At that time, the government tightened FDI rules to prevent foreign companies from taking advantage of Indian firms that were financially stressed during the crisis.
Officials say the latest change is meant to support manufacturing and industrial growth in India. Investments in sectors such as electronics, capital goods and solar equipment manufacturing are expected to benefit from the new policy.
The government has also introduced a faster approval system for certain proposals. Investments in selected manufacturing sectors will now be reviewed within 60 days, helping companies bring funds and technology into India more quickly.
However, the government has kept several safeguards. Investments that involve majority ownership or control of Indian companies will still need detailed scrutiny and government approval. Authorities say this is necessary to protect national security and strategic industries.
Industry groups had earlier raised concerns that strict approval rules were slowing down investment from neighbouring countries. The latest relaxation is expected to make it easier for companies to raise funds and strengthen supply chains, especially in sectors linked to electronics and manufacturing.
