FDI norms for companies with limited Chinese stake to be notified; seven sectors identified for time-bound approvals

The government will soon notify a framework for time-bound approvals of investments by companies with limited Chinese ownership in seven identified sectors, including rare-earth magnets and electronic components. The policy provides for regulatory clearances within 60 days; all such investments require political and security clearances. The automatic route will not apply to companies from China, Hong Kong, Pakistan, or Bangladesh. Inter-ministerial consultations are ongoing to align with FEMA, with changes requiring fine-tuning before coming into force. Officials say gross FDI in FY2025-26 is likely to reach around USD 90 billion.

DPIIT issued the change through Press Note 2 of the 2026 series. Seven sectors have been identified as critical for time-bound approvals; the automatic route would not apply to companies incorporated in China, Hong Kong, or other land-border-sharing countries such as Pakistan or Bangladesh.

Cabinet relaxed Press Note 3 of the 2020 series, allowing the automatic approval route for overseas investors with up to 10% beneficial ownership from countries sharing a land border with India.

Data up to February 2026 indicate gross FDI of USD 88.29 billion in the April–February period of 2025-26, with net FDI around USD 6.3 billion.

Invest India, DPIIT’s investment promotion and facilitation agency, helped secure 60 projects worth over USD 6.1 billion in 2025-26, estimated to generate more than 31,000 potential jobs.

Full 2024-25 fiscal year gross FDI was USD 80.65 billion; net FDI was around USD 0.96 billion.