The government has streamlined procedures for clearing foreign direct investment (FDI) proposals from Chinese companies, significantly reducing the time taken to process such applications, a senior official said.
“The meetings of the inter-ministerial committee (IMC) headed by the home secretary that takes a call on FDI applications are happening regularly to ensure that, within the laid-down guidelines, these applications are decided on,” the official, who did not wish to be named, stated.
The entire clearance process is also being reviewed regularly by the cabinet secretary. India had imposed tighter scrutiny on FDI from China during the onset of the Covid pandemic in 2020. This was implemented through Press Note 3 of 2020, aimed at preventing opportunistic takeovers of Indian companies during the stock market crash.
The press note stated that any entity from a country sharing a land border with India—or where the beneficial owner of an investment into India is located in, or is a citizen of, such a country—can invest only through the government route. While the note did not explicitly name China, it remains the only neighboring country with significant potential as an FDI source.
Issued in April 2020, the press note was followed by the India-China military clash in Galwan Valley, Ladakh, in June that year, which further strained bilateral business relations. As a result, many Chinese FDI proposals began accumulating due to heightened regulatory oversight.
To address this, the IMC was later constituted to examine and clear applications. The 2023–24 Economic Survey, presented in Parliament last July, also advocated for a more pragmatic approach toward Chinese investment. The Survey noted that as the US and EU shift their sourcing away from China, it would be more effective for Chinese companies to invest in India and export to these markets from here—rather than India importing from China, adding minimal value, and then re-exporting.
With the global trade landscape being reshaped by the policies of former US President Donald Trump—under which China faced the steepest tariffs—Chinese firms are increasingly seeking new investment destinations. Reports suggest that Chinese companies with confirmed export orders from the US are exploring alternative geographies to meet their commitments. A more efficient and transparent approval process in India could help attract a larger share of these investments.