India Eases FDI Norms for Overseas Firms with Chinese Stake: An Inside Look

India has relaxed FDI norms for overseas companies with up to 10% Chinese shareholding, permitting automatic investment routes across sectors except for entities registered in China/Hong Kong or land border-sharing countries. Aimed to boost investment, the changes help non-land border companies with minor LBC beneficial ownership.

In a significant policy shift, India has revised its Foreign Direct Investment (FDI) rules, allowing companies with up to 10% Chinese shareholding to invest under an automatic route across various sectors. However, the relaxed norms won't apply to firms registered in China, Hong Kong, or other nations sharing land borders with India.

This decision by the Union Cabinet aims to streamline investment procedures and attract foreign companies, excluding those from land border-sharing countries, unless specific approvals are provided. The regulations were amended following Press Note 3 of 2020, initially implemented to curb opportunistic takeovers during the COVID-19 pandemic.

About 600 applications are currently pending under the earlier regulation. With this announcement, many may proceed without seeking prior permission, impacting sectors like manufacturing and technology. The Department for Promotion of Industry and Internal Trade (DPIIT) and the Department of Economic Affairs will soon notify these changes to bring them into immediate effect.

(With inputs from agencies.)