India is considering changes to its foreign direct investment (FDI) rules under Press Note 3 to allow Chinese investments in certain sectors, sources told CNBC-TV18.
The government may relax approval requirements for investments in non-sensitive and non-strategic sectors, the sources said, adding that Niti Aayog has recommended lifting Press Note 3 restrictions, citing changed circumstances since the policy was introduced in 2020.
Under Press Note 3, investments from countries sharing a land border with India, including China, require prior government approval. The rule was tightened during the COVID-19 pandemic to prevent opportunistic takeovers of Indian companies.
The move comes against the backdrop of escalating trade tensions with Washington, after the United States imposed 50% tariffs on some Indian goods. The central government has in recent months drawn closer to Beijing and Moscow on trade and energy, resisting US pressure to scale back ties.
Since 2020, Chinese investments have been approved on a case-by-case basis, the sources said. Manufacturing industry groups and private equity funds have also made representations to the government seeking automatic route approval for Chinese investments in non-strategic sectors, they added.
Industry stakeholders have further requested time-bound approvals for applications filed under Press Note 3.
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