New Delhi: India is opening the door to Chinese investors once again. Recent changes to ‘Press Note 3’ could bring in billions in foreign investment. Introduced in April 2020 during the COVID-19 pandemic, the rule controls investments from countries that share land borders with India, including China. It was meant to prevent opportunistic takeovers during the pandemic but ended up drastically cutting Chinese investment.
A new report from CRISIL Intelligence says that easing these rules could push China’s share of total FDI back up to pre-pandemic levels of around two percent. Between 2014 and 2019, FDI from China and Hong Kong accounted for nearly two percent of India’s total foreign investment.
After Press Note 3 came into effect, this share plummeted to just 0.27 percent, showing the stringent scrutiny and approvals required for cross-border deals.
The revised guidelines are expected to clear the backlog of pending proposals and accelerate approvals. This is particularly notable in sectors such as capital goods, electronics components and polysilicon manufacturing, where defined approval timelines of 60 days will facilitate faster collaboration between Indian and Chinese firms.
Analysts say that this could lead to a short-term surge in investment from China and Hong Kong, boosting India’s manufacturing base and reducing dependence on imports in critical sectors.
Government data show that under ‘Press Note 3’, investment proposals worth Rs 75,691 crore were submitted, but only Rs 13,625 crore received formal approval. The new amendments aim to make the process smoother and faster, while maintaining national security safeguards.
Experts say that this change could have strategic implications. With the Indo-Pacific region seeing increasing competition for high-tech manufacturing, semiconductors and renewable energy components, the return of Chinese FDI could help India scale production and strengthen domestic supply chains. Sectors like electronics, solar energy and electric vehicles, which rely heavily on imported components, stand to benefit the most.
International investors are also closely watching India’s regulatory environment. By ensuring predictable and transparent approval processes, the government is communicating that India is open to international capital while balancing economic security concerns.
With Chinese firms now potentially able to inject capital at a faster pace, India could witness a notable uptick in foreign investment inflows over the next 12 to 24 months. This comes at a time when the government is promoting initiatives such as ‘Make in India’ and production-linked incentives (PLI) to boost domestic manufacturing. The easing of ‘Press Note 3’ is a strategically important move for both foreign investors and the Indian economy.
