India Eases FDI Norms, Strengthens Trade Ties with China

In a significant policy shift, the Indian government has relaxed foreign direct investment (FDI) norms for countries sharing land borders, which includes China. This amendment to press note 3 of 2020 was approved during a Union Cabinet meeting led by Prime Minister Narendra Modi on Tuesday.

Countries such as China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan will benefit from this change, removing the previous requirement for mandatory government approval for foreign investors from these nations. Despite minimal FDI inflow from China, bilateral trade continues to flourish, cementing China as India's second-largest trade partner.

India's exports to China saw a nominal decline in 2024-25, but imports rose significantly, resulting in an expanded trade deficit. The latest figures for 2025-26 indicate a rise in both exports and imports, showing a promising upward trend in trade relations.