China silent on India’s move to ease FDI norms, Chinese businesses say ‘partial’ opening

Beijing: China has refrained from commenting on India’s decision to ease foreign direct investment (FDI) norms for entities with minority shareholders from countries sharing land borders with it, while Chinese businesses described the move as only a “partial” opening.

India on Tuesday relaxed FDI rules by allowing overseas companies with up to 10 per cent beneficial ownership from land-bordering countries to invest in India without mandatory government approval. Earlier, even a single share held by investors from such countries required approval before investments could be made in any sector. Other FDI conditions, including sectoral caps and entry routes, will continue to apply.

China’s state-run Xinhua News Agency said the move represents a major shift in India’s investment policy after nearly six years. However, the Chinese Foreign Ministry declined to comment on the development. At a media briefing, spokesperson Guo Jiakun said the matter should be addressed by the relevant authorities.

China is currently grappling with overcapacity in several manufacturing sectors, particularly in EVs and battery production, which have saturated the domestic market and increasingly depend on overseas demand. Given the size of the Indian market, there are expectations in China for broader market access for EVs, batteries and related industries.

Clarifying the policy change, Joint Secretary in the Department for Promotion of Industry and Internal Trade, Jai Prakash Shivahare, said restrictions on direct investors from land-bordering countries remain unchanged. The relaxation applies only to overseas entities based in non-bordering countries where beneficial ownership from land-bordering nations is below 10 per cent and non-controlling.

Chinese experts and businesses told the state-run Global Times that the adjustment could allow greater Chinese investment in sectors such as solar energy and electronics, benefiting related industries in India. They also urged New Delhi to further ease investment curbs to strengthen bilateral economic cooperation, which has been gradually recovering since 2024.

The Chamber of Chinese Enterprises in India described the policy shift as a “partial optimisation” rather than comprehensive liberalisation, noting that large-scale investments and projects involving control by Chinese entities will still require government approval.

According to the chamber, the fast-track approval mechanism allowing clearances within 60 days is limited to a few sectors such as electronic components and polysilicon and does not represent a broad relaxation across industries.

Most Chinese investments will continue to face strict scrutiny & the actual implementation of the revised policy remains uncertain. Analysts say India is seeking to expand sectors such as mobile manufacturing, semiconductors, AI and new-energy vehicles, which rely significantly on Chinese technology and expertise.

However, the opening remains selective.

Qian Feng of Tsinghua University’s National Strategy Institute said improving ties since the leaders of India and China met in Kazan in 2024 make the policy revision timely.

Relations between the two nations deteriorated sharply after the Galwan Valley clash in June 2020. Following which, India banned over 200 Chinese mobile apps, including TikTok and WeChat, and rejected a major investment proposal from EV maker BYD.