India May Ease Chinese FDI Restrictions In Manufacturing, Renewable Energy, Auto Components

2025-08-30 02:04:15

(MENAFN- KNN India) New Delhi, Aug 30 (KNN) India is considering a significant shift in its foreign direct investment (FDI) policy by relaxing rules for Chinese investments in specific sectors.

The proposal aims to allow 20–25% FDI through the automatic route in non-sensitive areas such as manufacturing, renewable energy, and auto components.

Currently, under Press Note 3 (2020), investments from countries sharing land borders with India, particularly China, require prior government approval.

This rule was introduced after the COVID-19 outbreak and escalating border tensions, to prevent opportunistic acquisitions of Indian firms.

Officials now suggest a more balanced approach. While strategic sectors like defence, telecom, energy exploration, and sensitive installations will remain restricted, others could be opened up to streamline investments, create jobs, and strengthen domestic supply chains.

Any concerns raised about specific investments will still be examined individually to safeguard national interests.

This development comes at a time when diplomatic engagement between India and China is slowly resuming. Recent ministerial visits, talks on border disputes, and Prime Minister Narendra Modi's upcoming participation in the Shanghai Cooperation Organisation (SCO) summit in China signal efforts to stabilise ties.

The government's policy think tank, NITI Aayog, has also recommended easing restrictions by allowing up to 24% Chinese FDI without prior clearance, a move aimed at reviving stalled projects such as BYD's $1 billion electric vehicle plan.

Industry observers note that such reforms could encourage investment flow, reduce project delays, and support India's manufacturing ambitions.

If approved, this would mark India's first step towards easing FDI restrictions on Chinese companies since 2020, reflecting a cautious balance between security concerns and economic growth.

(KNN Bureau)

MENAFN30082025000155011030ID1109996796

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.