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India approved one Chinese Foreign Direct Investment proposal worth Rs 1 crore during financial year 2025-26.
Thirteen proposals from Hong Kong were cleared in the same period for Rs 610.42 crore.
The approvals were processed under the government route, which requires prior approval for specified foreign investments.
Press Note 3, issued by DPIIT in April 2020, mandates prior approval for investment from countries sharing a land border with India.
An amendment on 10 March 2026 allowed investors from land-border countries with non-controlling beneficial ownership up to 10% to use the automatic route.
| Feature | Automatic route | Government route |
|---|---|---|
| Prior approval needed | No | Yes |
| Who processes it | No approval; only post-facto reporting to the RBI | The administrative ministry concerned, with DPIIT as the nodal department |
| Typical timeline | Immediate | Case-by-case scrutiny |
| Applies to investors from land-border countries | Only in the limited cases now permitted | Yes, as the default under Press Note 3 |
Press Note 3 was issued in April 2020, in the early weeks of the COVID-19 pandemic, when share prices worldwide had collapsed and there was concern that Indian companies could be acquired cheaply by investors from neighbouring countries. It moved all investment from countries sharing a land border with India — and any investment where the beneficial owner is situated in or is a citizen of such a country — from the automatic route to the government route, requiring prior approval. The crucial words are 'beneficial owner': the rule was written to catch investment routed through third countries, not merely money sent directly from Beijing. The consequence was a sharp fall in approved Chinese investment, visible in the single Rs 1 crore approval in 2025-26, and long delays for Indian companies that had Chinese minority shareholders. The March 2026 amendment addresses that specific difficulty by permitting non-controlling beneficial ownership of up to 10% through the automatic route.
Simple Analogy: It is a doorman instructed to stop not only people from certain addresses but anyone acting on their behalf — effective, but slow for everyone in the queue.
GS Paper III > Indian Economy, investment models, effects of liberalisation
Financial Awareness > FDI policy, routes and regulation
General Awareness > Economy and government policy
The DPIIT instruction requiring prior government approval for FDI from countries sharing a land border with India.
The person who ultimately owns or controls an investment, regardless of the country it is routed through.
The FDI route requiring no prior approval, with only post-investment reporting to the RBI.
The FDI route requiring prior approval from the concerned administrative ministry.
Department for Promotion of Industry and Internal Trade, under the Ministry of Commerce and Industry, the nodal body for FDI policy.