In March 2026, the Indian government eased investment restrictions imposed in 2020 that required government approval for any investment in which a beneficial owner was a citizen of, or located in, a country sharing a land border with India. This change was instituted following reports that the People’s Bank of China’s stake in HDFC Bank — one of India’s largest mortgage companies — had crossed the 1 per cent threshold.
The stated objective of the 2020 restrictions was to curb ‘opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic’. But with Beijing and New Delhi engaged in a border standoff from May 2020, investment scrutiny became part of a broader Indian pushback against China.
Six years on, both countries are seeking to rebalance the bilateral relationship. The 2026 changes permit investors with non-controlling beneficial ownership of up to 10 per cent from countries sharing a land border with India to enter through the automatic route, bypassing prior government approval. The changes also commit the government to deciding on proposals within 60 days in select sectors such as capital goods, electronic components and upstream inputs for solar cell manufacturing.
