India has successfully attracted ₹4,895.65 crore in foreign direct investment proposals following the easing of rules for Chinese-linked firms, according to latest government data. The 29 FDI proposals have been reported by entities from various countries including Mauritius, the United States, Korea, Japan, Singapore, Luxembourg and the Cayman Islands. These investments span crucial sectors such as information technology, artificial intelligence, information and communication, manufacturing, pharmaceuticals, data centres and transport services. The finance ministry notified these changes under FEMA on May 1, 2026, marking a significant shift in India's investment policy framework. As per the commerce and industry ministry, "A total of 29 FDI investments have been reported under the revised framework up to 20 August, 2026, involving proposed FDI of ₹4,895.65 crore."
The revised framework permits overseas companies with up to 10 per cent Chinese shareholding to invest in India under the automatic route, subject to sectoral conditions. However, these relaxed FDI rules do not apply to entities registered in China, Hong Kong, or other countries that share land borders with India. As per the amendments, foreign companies having a Chinese/Hong Kong shareholding of up to 10 per cent will be eligible to invest in India in sectors where FDI is permitted under the automatic route. The reform provides greater certainty to investors, reduces transaction time and further strengthens the ease of doing business in India, according to official statements. The "Press Note 2 of 2026" and consequent amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, notified on May 1, 2026, introduced the beneficial ownership test at the investor entity level, eliminating the need for prior government clearance in eligible cases.
The updated rules are designed to speed up foreign investment by removing the prior approval requirement where ownership by entities from land-bordering countries is non-controlling and limited to 10%. Investors can now use the automatic route, provided they meet the applicable reporting requirements. The "beneficial ownership test is now applied at the level of the investor entity," allowing the investor entity to proceed with the investment without seeking any additional approval once the relevant information has been reported to the government. Prior to the May revision, even companies with only a small Chinese stake held by an individual or entity from a country sharing a land border with India had to obtain government clearance before investing in any sector in the country.
Meanwhile, China's National Development and Reform Commission (NDRC) announced on Friday that it will revise measures for managing outbound investment to better protect investors' rights and assets while fending off overseas risks. The state planner released a draft of the revised rules and is seeking public comments until September 20. The revised regulations will cover outbound investments by companies, other organisations and individuals, expanding significantly from existing rules that came into effect in 2018. This expansion represents a broadening of regulatory oversight to include individual investors in China's outbound investment framework, marking a significant shift in the regulatory approach to international investment activities.
The revised rules will step up protection for investors against risks such as political instability in some countries, as reported by Reuters. This enhanced protection framework reflects China's commitment to safeguarding domestic investor interests in international markets. The measures are designed to provide better safeguards for Chinese entities and individuals engaged in outbound investment activities, representing a significant strengthening of investor protection mechanisms in the regulatory framework. The reform is expected to provide investors with greater certainty while reducing transaction timelines and strengthening India's ease-of-doing-business environment.
