The central government has relaxed investment norms for countries that share land borders with India. Government sources said on Tuesday that the Press Note 3 of 2020 has been amended. The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi.
Earlier, under this policy, any company from countries sharing a land border with India, or any foreign firm with shareholders from those countries, was required to obtain mandatory approval from the central government before making investments in India in any sector. According to sources, the revised rules have eased some of these requirements.
Countries that share land borders with India include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan. Investments from entities linked to these countries were earlier subject to a strict approval process.
According to official data, from April 2000 to December 2025, China’s share in the total foreign direct investment (FDI) equity inflow into India was only 0.32 per cent, amounting to about $2.51 billion. China ranks 23rd on the list of countries investing in India.
Relations between the two countries deteriorated sharply after the clash between Indian and Chinese troops in the Galwan Valley in June 2020. It was the most serious military confrontation between the two sides in decades. Following the incident, the Indian government banned more than 200 Chinese mobile apps, including TikTok, WeChat and UC Browser.
Although China’s direct investment in India remains relatively small, bilateral trade between the two countries has increased significantly. China is currently India’s second-largest trading partner.
In the 2024–25 financial year, India’s exports to China declined by 14.5 per cent to $14.25 billion, compared with $16.66 billion in 2023–24. Meanwhile, imports from China rose by 11.52 per cent to $113.45 billion, up from $101.73 billion in the previous year. As a result, the trade deficit widened from $85 billion in 2023–24 to $99.2 billion in 2024–25.
Between April and January of the 2025–26 financial year, India’s exports to China increased by 38.37 per cent to $15.88 billion. During the same period, imports from China rose by 13.82 per cent to $108.18 billion. The trade deficit during this period stood at about $92.3 billion.