According to economictimes.indiatimes.com, India is set to notify new foreign direct investment (FDI) regulations under the Foreign Exchange Management Act (FEMA) that will permit overseas companies with up to 10 per cent stake owned by Chinese entities to invest in India under the automatic route across sectors. The Union Cabinet approved these amendments to Press Note (PN) 3 of 2020 in March 2026, and the Department of Economic Affairs (DEA) is finalizing the formal notification — described by officials as requiring ‘a lot of fine-tuning’ — for imminent release.
Scope and Exclusions
The eased norms explicitly exclude entities registered in China, Hong Kong, or any other country sharing a land border with India. This geographic restriction preserves national security safeguards while selectively opening access for multinational firms with modest Chinese minority stakes — a category increasingly common among global manufacturing and technology supply chain players.
Accelerated Review for Priority Sectors
To strengthen domestic manufacturing capacity, the government has designated certain high-priority manufacturing activities for expedited processing: proposals in capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer, and any additional sectors identified by the Committee of Secretaries chaired by the Cabinet Secretary will be reviewed within 60 days.
FDI Performance and Investment Facilitation
Total FDI inflows — including reinvested earnings — reached USD 88.29 billion during April–February 2025–26, up from USD 80.61 billion in 2024–25. Net FDI surged to USD 6.26 billion in the same period, compared to just USD 959 million for the full fiscal year 2024–25. DPIIT Secretary Amardeep Singh Bhatia projected total FDI for FY 2025–26 will reach USD 90 billion.
Invest India, the national investment promotion agency, facilitated the grounding of 60 projects worth over USD 6.1 billion in 2025–26, spanning 14 states and expected to generate more than 31,000 potential jobs. Of this value, 42 per cent originated from European nations, with continued participation from the United States, Japan, South Korea, and Australia — affirming broad-based confidence in India’s regulatory environment and manufacturing capabilities. Emerging sources include Brazil, New Zealand, and Canada.
Chemicals, pharmaceuticals, biotechnology, and food processing accounted for about 65 per cent of grounded investments, while electronics system design and manufacturing, aerospace and defence, and auto/EV sectors recorded significant activity. Invest India is focusing outreach on 11 countries to deepen inflows.
“India’s investment momentum is a direct outcome of policy clarity, institutional commitment, and the trust global investors place in our systems.” — Amardeep Singh Bhatia, DPIIT Secretary
This policy recalibration arrives amid intensifying global supply chain diversification efforts. As major economies reconfigure sourcing strategies away from concentrated hubs, India’s targeted relaxation reflects a pragmatic response to investor demand for flexibility — particularly for multinationals navigating complex ownership structures across Asia. For supply chain professionals, the change lowers entry barriers for joint ventures and supplier partnerships involving non-China-headquartered firms with minor Chinese equity participation, especially in electronics, capital goods, and green energy inputs like polysilicon. It also signals strengthened institutional capacity for fast-tracked approvals in strategic industrial segments — a critical factor when evaluating India as a nearshore or friend-shoring destination.
Source: economictimes.indiatimes.com
Compiled from international media by the SCI.AI editorial team.
