China and India flag collectively realtions textile fabric material texture
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Oleksii Liskonih
The Finance Ministry on Saturday notified amendments to the Overseas Trade Administration Guidelines, permitting abroad firms with as much as 10 per cent Chinese language (or different land-bordering nation) shareholding to put money into India below the automated route.
The transfer follows a Cupboard resolution to ease FDI norms for investments from land-bordering international locations (LBCs) and is geared toward boosting manufacturing in digital parts, capital items and photo voltaic cells.
China shares land borders with India together with Pakistan, Bangladesh, Nepal, Myanmar, Afghanistan and Bhutan.
The modification introduces a clearer definition of useful possession, aligned with the Prevention of Cash Laundering Guidelines, 2005, and broadly utilized by traders. Underneath the revised framework, the useful possession check will apply on the investor entity stage, investments with non-controlling LBC possession of as much as 10 per cent shall be allowed below the automated route, topic to sectoral caps and circumstances and investee firms should report related particulars to DPIIT.
key exclusions
In impact, international firms with as much as 10% Chinese language or Hong Kong shareholding can now put money into sectors open below the automated route.
Nonetheless, the comfort doesn’t apply to entities included in China, Hong Kong or different LBCs. Earlier, even minimal shareholding from these jurisdictions triggered obligatory authorities approval; now, the restriction is linked particularly to useful possession.
The notification additionally clarified that multilateral banks or funds of which India is a member won’t be handled as entities of any particular nation, nor will any nation be deemed the useful proprietor of such investments.
On the identical time, investments involving any direct or oblique LBC possession — whereas not requiring prior approval below the revised norms — will stay topic to RBI-prescribed reporting necessities.
Individually, the Cupboard has mandated that proposals involving LBC investments in key manufacturing segments corresponding to capital items, digital parts, polysilicon and ingot-wafer be processed inside 60 days. In all such instances, majority possession and management should stay with resident Indian residents or Indian-owned entities.
Printed on Might 2, 2026
