India eases FDI norms for China, other countries sharing land borders

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday (Mar 10) approved changes in guidelines on investments from countries sharing land borders with India (LBCs), especially China. The decision was aimed at unlocking greater inflows from global funds for startups to take forward the agenda of Ease of Doing Business in India.

An official press release detailed the cabinet's approved changes in the FDI policy to provide for a definitive timeline for investments in critical sectors requiring approval under PN3.

An expeditious decision within 60 days would help companies enter into collaborations to expand manufacturing in India, the release said. It added that a 60-day decision or approval timeline would help companies enter into joint ventures to access technologies and integrate with global supply chains.

The shift in FDI policy for investment from Land Bordering Countries is expected to boost manufacturing in electronic components, capital goods, and solar cells, according to the release.

Also Read: 'We built this country together': UAE Envoy Alshaali reassures Indians amid West Asia crisis

Countries that share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.

China stands at the 23rd position with only a 0.32 per cent share (USD 2.51 billion) in the total FDI equity inflow reported in India from April 2000 to December 2025.

Relations between the Asian giants collapsed in June 2020 following the lethal clash in the Galwan Valley, which led to a freeze in major diplomatic engagements and the banning of over 200 Chinese apps (TikTok, WeChat, etc.). While the military standoff along the Line of Actual Control (LAC) ended in October 2024, this move is the most substantial step toward economic normalisation since the crisis began.

Bilateral trade between the two countries currently stands at $155.6 billion for the 2025 calendar year, marking a record high in economic engagement despite ongoing geopolitical friction. During the first ten months of the current fiscal period (April–January 2025–26), total trade reached $124.06 billion, driven by a sharp 38.37 per cent surge in India's exports to China, which totalled $15.88 billion. However, with imports from China rising to $108.18 billion, the trade deficit remains a significant concern at $92.3 billion, prompting recent policy adjustments to encourage Chinese investment in domestic manufacturing sectors.