India has attracted foreign direct investment worth ₹4896 crore after easing rules for overseas investors. Since May 2026, 29 proposals have been cleared under the revised framework. The new policy allows foreign firms with up to 10% shareholding from countries sharing land borders with India, including China, to invest through the automatic route. Earlier, even a 1% shareholding from such nations required government approval.
The inflows have come from investors based in the United States, Singapore, Mauritius, South Korea, Japan, Luxembourg and the Cayman Islands. Sectors that benefited include artificial intelligence, information technology, pharmaceuticals, manufacturing, data centres and transport services.
The government introduced the changes through a FEMA notification effective May 1. Direct investments from China, Hong Kong, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar and Afghanistan still need clearance. Sensitive sectors such as capital goods, electronic components, advanced batteries and rare earth processing must remain majority controlled by resident Indian citizens or Indian owned entities.
The revised norms reduce transaction timelines by nearly 40% and provide greater regulatory certainty for global funds with indirect Chinese limited partners. A 60‑day clearance window has been set for sensitive areas.
The earlier restrictions were imposed in 2020 during the pandemic to prevent opportunistic takeovers. The new framework balances national security concerns with the need to attract foreign capital and improve ease of doing business.
