New Delhi: India has eased some investment restrictions on Chinese companies, marking a cautious step toward improving economic ties between the two countries after nearly six years of strained relations.
The decision comes after India introduced strict foreign investment rules in 2020 that required government approval for investments from countries sharing a land border with India, including China. The policy was introduced during a period of heightened tensions following a deadly border clash between Indian and Chinese troops in the Himalayan region.
Under the revised approach, the Indian government has allowed certain limited investments from Chinese firms without the earlier lengthy approval process. Small minority investments that do not give control of Indian companies can now proceed more easily, while larger proposals will still be reviewed by authorities.
Officials say the change aims to attract foreign capital and support India’s manufacturing sector while still protecting strategic industries. The relaxed rules are expected to help sectors such as electronics, capital goods and renewable energy related manufacturing where Chinese technology and supply chains play an important role.
Despite the easing of rules, India has kept restrictions in place for sensitive sectors and investments that could give foreign companies controlling stakes in domestic firms.
The investment curbs introduced in 2020 had sharply reduced Chinese investment in India. Analysts say the new move could slowly revive business cooperation between companies from the two countries.
China remains one of India’s largest trading partners, although India runs a significant trade deficit with Beijing. Business groups in India have been urging the government to simplify investment procedures to support industrial growth and strengthen supply chains.
The policy shift is also seen as part of a gradual attempt by both countries to stabilise relations after years of diplomatic and military tensions along their disputed border. Recent developments, including renewed diplomatic engagement and discussions on restoring trade and travel links, suggest that both sides are trying to rebuild economic cooperation cautiously.