India approved only one Chinese foreign direct investment proposal worth ₹1 crore during the 2025-26 fiscal year. This highlights the government's continued strict scrutiny of investments from countries sharing a land border. In comparison, 13 proposals from Hong Kong totaling over ₹610 crore received government clearance during the same period.
Official government data for the financial year ending March 2026 highlights the ongoing regulatory caution regarding foreign direct investment (FDI) from neighboring nations. While the government approved a total of 63 FDI proposals worth ₹10,292.67 crore during this period, direct investment from China remained extremely limited.
Impact of Press Note 3 on Investment Flows
This trend is driven by the mandatory prior government approval process introduced under Press Note 3 in April 2020. Designed to prevent opportunistic takeovers during the pandemic, the policy requires rigorous scrutiny for any investment originating from countries that share a land border with India. These nations include China, Bangladesh, Pakistan, Nepal, Myanmar, Bhutan, and Afghanistan.
While the government recently introduced limited relaxations to these rules in March, they specifically excluded entities registered in China and Hong Kong from the automatic route. Consequently, these regions continue to face a more challenging approval process compared to other international investors.
Diverse Global Investment Sources
Beyond the border-specific restrictions, India continues to attract significant capital from other global regions. During the 2025-26 financial year, Singapore emerged as the leading source of approved FDI by value, with five proposals totaling ₹3,259.88 crore. The United Kingdom followed as the second-largest contributor with approved investments worth ₹2,477.67 crore, while Thailand secured approval for two projects valued at ₹1,600 crore.
Long-Term FDI Trends
Historically, direct Chinese participation in India's FDI landscape has been modest. Between April 2000 and March 2026, Chinese investment accounted for approximately 0.32% of total FDI equity inflows, totaling roughly $2.51 billion. Hong Kong, treated as a separate entity in these government filings, has accounted for a 0.62% share over the same quarter-century period.
For investors, this data reinforces that the government maintains a policy of selective engagement. While capital flows from major hubs like Singapore and the UK remain strong, the path for direct investment from bordering nations remains highly regulated. The key monitorable for market participants will be whether any future changes to these FDI norms are introduced, or if the current cautious approach to regional investment remains the standard.