By Admin 
FDI Norms India: The Finance Ministry of the Government of India has notified amendments in the FEMA rules, under which foreign companies with up to 10 percent Chinese stake have now been allowed to invest through the ‘automatic route’.
This new rule has become effective from May 1, 2026. That is, global companies in India in which China or the countries sharing land border with India (China, Bangladesh, Pakistan etc.) have 10 percent or less stake can now invest directly in India without any government approval.
During the Corona epidemic in the country, a rule was made in the year 2020 that government permission was mandatory for companies or their investors from countries sharing borders with India to invest in India. Now under the new rules, if Chinese investors have 10 percent or more stake in a foreign company, then that company will be able to invest directly in India through the ‘automatic route’ (without government approval).
What was the rule earlier?
Earlier, if any company from the countries sharing land border with India wanted to invest even Rs 1 in India, then it had to first take written approval from the government. Even if a Chinese company had only 1 percent stake in a big American or European company, that company would have had to wait for months for government approval to invest in India, but now this will not happen.
This exemption is not only for companies registered in China or Hong Kong, but also for those American or European multinational companies in which Chinese investors have a small stake. This means that companies registered in China and Hong Kong will have to take government approval from now on.
purpose of change
The purpose of relaxing FDI rules is to accelerate manufacturing and investment in key sectors like electronic components, capital goods and solar cells in India.
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