Overview

• NITI Aayog’s draft recommendation would allow Chinese companies to take up to a 24% equity stake in Indian firms without security clearances previously mandatory under land-border FDI rules.
• The easing proposal is being reviewed by DPIIT, the finance and external affairs ministries and the Prime Minister’s Office, with final approvals expected to take several months.
• Strict post-2020 curbs imposed after the Galwan Valley clash had required vetting by both home and foreign ministries and contributed to a record low net FDI of $353 million in 2024–25.
• Heightened scrutiny derailed key projects, notably BYD’s planned $1 billion electric vehicle joint venture in 2023, and delayed numerous potential deals from Chinese investors.
• NITI Aayog has additionally suggested restructuring the FDI approval board to streamline investment clearances and attract more foreign capital.