India Approves Only 1 Chinese FDI Proposal Under Strict Rules

India approved only one Foreign Direct Investment (FDI) proposal from China, valued at Rs 1 crore, during the financial year 2025-26. In stark contrast, 13 proposals originating from Hong Kong received clearance, collectively amounting to Rs 610.42 crore.

These figures, released by the Department for Promotion of Industry and Internal Trade (DPIIT), highlight the continued application of the ‘Press Note 3’ framework.

Understanding the ‘Press Note 3’ Framework

The ‘Press Note 3’ policy, introduced in April 2020, mandates prior government approval for investments from nations sharing a land border with India. This measure was initially implemented during the COVID-19 pandemic.

Its primary objective was to prevent opportunistic takeovers and acquisitions of Indian companies during a period of economic vulnerability.

Overall FDI Approvals and Key Contributors

Between April 2025 and March 2026, the Indian government greenlit a total of 63 FDI proposals.

These approved investments collectively amounted to Rs 10,292.67 crore, approximately $1.18 billion.

• Singapore led by value, with five approved investments totaling Rs 3,259.88 crore ($382.52 million).
• The United Kingdom followed, securing approval for five proposals worth Rs 2,477.67 crore ($283 million).
• Thailand also saw significant approvals, with two proposals valued at Rs 1,600 crore (around $180 million).

Relaxation and Exclusions to FDI Rules

In March 2026, certain provisions of Press Note 3 were relaxed to allow investments up to 10% through the automatic route from land-bordering countries. This is conditional on non-controlling beneficial ownership and adherence to sectoral caps.

However, this relaxation explicitly excludes entities registered in China, Hong Kong, or any other nation sharing a land border with India.

The policy specifically covers countries such as:

• China
• Bangladesh
• Pakistan
• Bhutan
• Nepal
• Myanmar
• Afghanistan

Historical Context of Chinese and Hong Kong FDI

China has historically not been a major source of Foreign Direct Investment into India. Between April 2000 and March 2026, Chinese investments totaled $2.51 billion (Rs 16,162.25 crore).

This figure represents only 0.32% of India’s total FDI equity inflows, placing China 23rd among investing nations during that period.

Hong Kong, over the same timeframe, ranked 15th, contributing $4.91 billion (Rs 31,220.30 crore), which accounted for 0.62% of total FDI equity inflows.

A similar trend was observed in the preceding financial year, 2024-25, where only one Chinese FDI proposal worth Rs 28.71 crore ($3.44 million) was approved. In contrast, 11 proposals from Hong Kong, valued at Rs 1,225.28 crore ($146.51 million), received clearance.