India Approves Just 1 Chinese FDI Proposal; Hong Kong Gets 13 Amid Strict Border Rules
India Approves Just 1 Chinese FDI Proposal; Hong Kong Gets 13 Amid Strict Border Rules
India's FDI approvals show a cautious stance, clearing only one Chinese proposal worth ₹1 crore while Hong Kong received 13. Discover how Press Note 3 impacts investments from border countries.
India has recently approved a mere one Chinese Foreign Direct Investment (FDI) proposal valued at ₹1 crore during the financial year April 2025-March 2026. In contrast, 13 applications from Hong Kong, totaling ₹610.42 crore, received clearance during the same period, according to official data.
These investment approvals are particularly significant due to the stringent regulations imposed since April 2020 under Press Note 3 by the Department for Promotion of Industry and Internal Trade (DPIIT). This measure mandates prior government approval for investments originating from countries that share a land border with India. The policy was initially introduced to prevent opportunistic takeovers and acquisitions of Indian companies, especially amidst the economic uncertainties of the COVID-19 pandemic.
Overall, the government sanctioned 63 FDI proposals amounting to ₹10,292.67 crore (approximately $1.18 billion) for the specified financial year. Singapore emerged as the leading source of approved FDI in terms of value, with five proposals totaling ₹3,259.88 crore ($382.52 million). The United Kingdom followed with five proposals worth ₹2,477.67 crore ($283 million), and Thailand secured approval for two proposals valued at ₹1,600 crore (about $180 million).
Despite the general framework, recent adjustments to Press Note 3 in March allowed for investments under the automatic route for non-controlling beneficial ownership of up to 10% from land border countries. However, it was explicitly clarified that these relaxed norms would not apply to entities registered in China or Hong Kong, or other specific countries sharing land borders with India, which include Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.
Historically, India has not received substantial direct investments from China. China currently ranks 23rd among foreign investors, accounting for only 0.32% of India's total FDI equity inflows, underscoring India's cautious approach to investments from its land-bordering neighbors.
