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

“CoS [committee of secretaries] under the Cabinet Secretary may also revise the list of specified sectors,” the statement added. “... the majority shareholding and control of the investee entity will be with resident Indian citizen(s) and/or resident Indian entity(ies) owned and controlled by resident Indian citizen(s), at all times,” the statement added.

The changes were made after the government realised that restricting non-strategic, non-controlling interests could be adversely affecting investment flows from investors including global PE and VC funds.

The cabinet’s decision came about six years after New Delhi regulated FDI from China through the Press Note 3 (PN3), in April 2020 as a safeguard from hostile Chinese takeover of vulnerable Indian firms even as relations between Asia’s two largest economies dipped following to a major clash between the Indian and Chinese armies along the Line of Actual Control in the Galwan Valley in 2020, in which 20 Indian soldiers and at least four Chinese ones were killed.