Open to rethink on restrictions on FDI from China, says official

New Delhi: India could ease some restrictions imposed on foreign direct investment from China, as a part of the thawing of relations with Beijing, said a senior government official. "If need be, we can take a relook at Press Note 3," the official said. "All options are open."

The government's premier think-tank Niti Aayog had last month suggested dropping the condition of mandatory prior approval for up to 24% FDI from China.

There has been a warming of ties between the two neighbours in recent months with bilateral visits of ministers and bureaucrats, New Delhi and Beijing agreeing to start direct flights, allowing tourists, and stepping up dialogues to resolve border disputes, further accelerated by US President Donald Trump's tariff regime. The US' 50% tariffs on India came into effect on August 27.

China last week agreed to facilitate supply of rare earth magnets and fertilisers to India following a visit by Chinese foreign minister Wang Yi. External affairs minister S Jaishankar this month visited Beijing for the first time in six years and met Chinese President Xi Jinping amid efforts from both sides to reset ties. PM Narendra Modi is set to visit China for the Shanghai Cooperation Organisation Summit, scheduled for August 31-September 1, his first in seven years. He will meet Chinese President Jinping on the sidelines of the summit.

Press Note 3
Press Note 3, makes prior government approval mandatory for foreign investments from countries that share land borders with India.

In April 2020, India made prior government approval mandatory for FDI from countries which share a land border with it, irrespective of sectoral caps by amending Press Note 3 to curb opportunistic takeovers of domestic companies. The move was directed at China and it followed border clashes between the two neighbours.

At the ET World Leaders Forum 2025 last week, commerce and industry minister Piyush Goyal said the decision was important at that point of time and that it also related to India's strategic interest in certain sectors which the government wanted to remain in Indian hands.

"It does not ban FDI from anywhere...We only take a cautious approach, and there's a pre-approval (required) and we have given approval to many companies," he said.

Asked if Press Note 3 will continue, Goyal said, "I can only speak about the situation today. As I said, when the times change, situations change. Decisions can be made to suit the times".

Niti had last month suggested dropping mandatory prior approval for up to 24% foreign direct investment from China