The government is considering changes to Press Note 3 of the Foreign Direct Investment (FDI) policy in order to allow Chinese investments in certain non-strategic sectors, as per a report by CNBC-TV18. The move comes a few days after the 50 per cent Trump tariff took effect from August 27. This could be an attempt by India to relax rules that were tightened during the COVID-19 pandemic and improve trade.
Govt rethinks Press Note 3 restrictions
In April 2020, India revised its FDI policy to make government approval mandatory for investments from countries sharing land borders, including China, to avoid hostile takeovers of Indian companies. The government is now reassessing whether those restrictions should continue in their current form.
According to CNBC-TV18, Niti Aayog has recommended lifting some of the restrictions under Press Note 3, pointing out that circumstances have changed since 2020. The policy was introduced at the peak of the pandemic to prevent “opportunistic takeovers” by investors from countries sharing land borders with India.
Government may ease FDI norms for Chinese investors
According to a tweet by CNBC-TV18 on X, the government may allow Chinese investments through the automatic route in non-sensitive and non-strategic areas. Until now, all proposals from such countries required prior government approval. Since 2020, approvals have been given only on a case-by-case basis.
Manufacturing and PE funds push for faster clearances
According to CNBC-TV18, manufacturing industries and private equity funds have made representations to the government, seeking faster and time-bound approvals under Press Note 3. They argue that Chinese capital is crucial in certain sectors and delays in clearances hurt business plans.
Modi–Xi meeting on SCO sidelines
Prime Minister Narendra Modi is scheduled to meet Chinese President Xi Jinping on the sidelines of the SCO summit in Tianjin from August 31 to September 1, with the focus on diversifying partnerships and strengthening regional cooperation at a time when India’s trade relations with the US are strained by tariff tensions.
The meeting follows Chinese Foreign Minister Wang Yi’s earlier visit to New Delhi on August 18–19, 2025, which signalled a thaw in bilateral ties after years of border friction. During that visit, both countries agreed to reopen border trade through three passes, resume direct flights, expand the Kailash Mansarovar Yatra, and reinforce diplomatic and military dialogue mechanisms to maintain peace along the Line of Actual Control.