The Indian government is set to notify amendments under the Foreign Exchange Management Act (FEMA) that will relax foreign direct investment (FDI) norms for overseas companies with Chinese shareholding of up to 10 per cent, a senior official informed PTI on Thursday.
Revised Framework Implementation
Once the Department of Economic Affairs (DEA) issues the notification, the revised framework will become effective. The Union Cabinet had approved amendments to Press Note 3 of 2020 in March, permitting foreign companies with up to 10 per cent Chinese ownership to invest in India via the automatic route across various sectors. However, this relaxation does not apply to entities registered in China, Hong Kong, or any other country sharing a land border with India.
Jai Prakash Shivahare, Joint Secretary of the Department for Promotion of Industry and Internal Trade (DPIIT), stated, "The DEA will have to issue the notification under FEMA. It will be notified very soon. It requires a lot of fine-tuning." He added that the government is also identifying sub-sectors where investment applications will be processed within 60 days.
Fast-Track Clearance for Manufacturing
Under the new rules, FDI proposals in specified manufacturing segments—including capital goods, electronic capital goods, electronic components, polysilicon, and ingot-wafer—along with any other sectors later identified by a committee of secretaries headed by the Cabinet Secretary, will receive clearance within 60 days. While DPIIT has already notified the changes, the DEA notification under FEMA is still awaited.
FDI Inflows on the Rise
Shivahare also revealed that total FDI, including reinvested earnings, rose to USD 88.29 billion during April-February 2025-26, compared to USD 80.61 billion in 2024-25. Net FDI into the country increased sharply to USD 6.26 billion during April-February 2025-26, against USD 959 million in the full 2024-25 fiscal year.
Separately, DPIIT Secretary Amardeep Singh Bhatia said overall FDI inflows are likely to touch USD 90 billion in the full 2025-26 fiscal year. He attributed this to reform measures, free trade agreements, and India’s fast economic growth, which are helping attract healthy investments.
Invest India's Role
The department also noted that Invest India, the national investment promotion and facilitation agency, helped ground 60 projects worth over USD 6.1 billion during 2025-26. These investments span 14 states and are estimated to generate more than 31,000 potential jobs. About 42 per cent of the total grounded investment value has come from European nations. Continued participation from the United States, Japan, South Korea, Australia, and other major source markets reflects broad-based international confidence in India’s regulatory environment and manufacturing capabilities. Emerging source countries such as Brazil, New Zealand, and Canada also indicate diversification of India’s investment base.
"India's investment momentum is a direct outcome of policy clarity, institutional commitment, and the trust global investors place in our systems," Bhatia said.
Invest India Managing Director and CEO Nivruti Rai told PTI that chemicals, pharmaceuticals, biotechnology, and food processing accounted for around 65 per cent of grounded investments, driven by high-value projects. She added that sectors such as electronics system design and manufacturing, aerospace and defence, and auto/EV have also seen significant activity. Rai said the agency is currently focusing on 11 countries to attract higher inflows.
