India has received 29 foreign direct investment (FDI) proposals totalling about Rs 4,895.65 crore following the easing of rules for overseas companies that have up to 10% Chinese or Hong Kong shareholding. According to an official, the policy shift has begun to yield tangible results since the finance ministry notified the changes under the Foreign Exchange Management Act (FEMA) on May 1, 2026.
The newly reported investments span a diverse range of sectors. Significant capital inflows have been directed toward information technology, artificial intelligence, information and communication, manufacturing, pharmaceuticals, data centres, and transport services, among other industries.
Data indicates that the 29 investments originate from entities and investors based in multiple global jurisdictions, including Mauritius, the United States, South Korea, Japan, Singapore, Luxembourg, and the Cayman Islands.
Under the revised framework, the requirement for prior government approval has been removed for overseas companies with up to 10% Chinese or Hong Kong shareholding. Provided they comply with applicable sectoral conditions and reporting requirements, investor entities can now proceed directly through the automatic route. Officials noted that this reform is designed to provide greater certainty to investors, reduce transaction times, and strengthen the overall ease of doing business in India.
Previously, foreign firms with even a single share held by shareholders from nations sharing a land border with India—which includes China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, and Afghanistan—were mandated to seek prior government approval before investing in any Indian sector.
Despite the relaxation for third-country companies with minor shareholding links, authorities clarified that the updated FDI rules do not apply directly to entities that are registered in China, Hong Kong, or other countries sharing a land border with India.
"The relaxation of FDI norms for overseas companies with minor Chinese or Hong Kong shareholding is a practical step forward for the Indian business ecosystem. By moving these proposals to the automatic route, the government is significantly reducing transaction timelines and regulatory friction for global investors. This policy clarity is particularly beneficial for capital-intensive sectors like artificial intelligence, manufacturing, and data centres, where speed of execution is critical for market growth and operational scaling." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
