Cabinet eases investment rules for China and neighbouring countries sharing land borders with India

Cabinet allows limited Chinese investments in key sectors

March 11, 2026

Government relaxes curbs on Chinese investments with safeguards

Limited Chinese investments allowed with strict safeguards

The Union Cabinet of India has approved changes to foreign investment rules allowing limited investments from companies based in countries that share land borders with India, including China, six years after strict restrictions were imposed.

The decision aims to boost investments in key sectors such as electronic components, capital goods manufacturing and emerging deep-tech startups.

In a statement issued after the cabinet meeting chaired by Prime Minister Narendra Modi, the government said revised guidelines for investments from Land Border Countries (LBCs) have been approved with specific safeguards.

Investments capped at 10% beneficial ownership

Under the revised policy, investments from neighbouring countries will be permitted automatically if they do not exceed 10% beneficial ownership in an Indian entity.

However, such investments will still need to comply with sectoral caps and other regulatory norms. The investee company will also be required to report details of these investments to the Department for Promotion of Industry and Internal Trade (DPIIT), which functions under the commerce and industry ministry.

The government also introduced a time-bound clearance mechanism for certain investments, ensuring approvals within 60 days for sectors including:

electronic components manufacturing
capital goods manufacturing
polysilicon production
ingot and wafer manufacturing
Government retains majority Indian ownership rule

The policy mandates that majority ownership and control of the investee entity must remain with resident Indian citizens or Indian-owned companies at all times.

The government added that a Committee of Secretaries under the Cabinet Secretary may revise the list of sectors eligible for expedited approvals in the future.

Industry welcomes move

Industry leaders said the decision reflects a balanced approach to attracting capital while safeguarding national interests.

Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA), said the move would help strengthen India’s electronics manufacturing ecosystem.

He noted that India must build a stronger components and materials ecosystem, which currently remains a missing link in the country’s manufacturing value chain.

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