The government will soon notify a framework for time-bound approvals for investments by Chinese-owned limited companies in seven specific sectors, including rare earth magnets and electronic components, under recently relaxed FDI norms. The move aims to build local capabilities and boost inflows, as total foreign direct investment is expected to reach $90 billion in FY26, officials said.
Although the Cabinet on March 10 relaxed Press Note 3 (PN3 for Series 2020) by allowing an automatic approval route for foreign investors having beneficial ownership of up to 10% of countries that share a land border with India, the decision is yet to be formally notified, said the officials, requesting anonymity.
While the Department for Promotion of Industry and Internal Trade (DPIIT) issued the change through Press Note 2 of the 2026 Series on March 15, the Cabinet decision is yet to come into force as consultations are underway with stakeholders to align it with the Foreign Exchange Management Act (FEMA), they said.
DPIIT Joint Secretary Jai Prakash Shivahari confirmed this development. “The Department of Economic Affairs will have to issue the notification under FEMA,” he said, adding that the inter-ministerial consultation process is ongoing because the changes require significant “fine-tuning” of existing laws. He said that the new rules will come into effect very soon.
The revised FDI norms are expected to help process about 600 pending investment applications, an official said. “The idea is to allow investments in sectors that are vital to the Indian economy. Seven sectors have been identified currently. This will help India develop capabilities in these areas,” he said.
The policy provides for regulatory approvals of qualified applicants within 60 days.
The seven identified sectors are rare earth permanent magnets, rare earth processing, polysilicon and alloy wafers, advanced battery components, electronic component manufacturing, capital goods manufacturing, and electronic capital goods. Officials said that additional sectors or activities may be added later with the approval of the competent authority.
The official added that all these investments will still require political and security approvals. The Cabinet decision also specified that the automatic route will not apply to companies registered in China, Hong Kong or any other country sharing land borders such as Pakistan or Bangladesh.
Speaking at a press conference on Friday, DPIIT Secretary Amardeep Singh Bhatia said the strong fundamentals of the Indian economy remain a major attraction for global investors. He said that total foreign direct investment in the period 2025-2026 is likely to reach $90 billion.
Data through February 2026 support this trend, Shivahari said. India attracted a total FDI of $88.29 billion in the April-February period of 2025-26, while net FDI during the same period was about $6.3 billion. He added that the total foreign direct investment in the fiscal year 2024-2025 amounted to $80.65 billion, while the net foreign direct investment amounted to about $0.96 billion.
Commenting on India’s policy environment, Bhatia said: “India’s investment momentum is a direct result of policy clarity, institutional commitment and trust that global investors place in our systems.” He added that the Department of Investment and International Cooperation remains committed to continuing to streamline operations and ensuring investments translate into jobs, innovation and long-term value.
According to Bhatia, Invest India, DPIIT’s investment promotion and facilitation agency, helped secure 60 projects worth over $6.1 billion in 2025-26. These investments are expected to generate more than 31,000 potential job opportunities.
