India's FDI Inflows: Press Note 3 Easing and Chinese Investment

Amendments to Press Note 3 Could Boost Chinese FDI in India to 2%: Crisil Report​

Mumbai, March 23 – Amendments to the government’s Press Note 3 are expected to increase Chinese foreign direct investment (FDI) in India to around 2% of total FDI, according to a report by Crisil Intelligence.

Background on Chinese FDI in India​

Between 2014 and 2019, cumulative FDI inflows from China and Hong Kong accounted for approximately 2% of total FDI. Following the introduction of Press Note 3 in April 2020, which restricted investments to prevent opportunistic acquisitions during the Covid-19 downturn, the share dropped sharply to 0.27%.

Impact of Press Note 3 Amendments​

The easing of Press Note 3 norms is expected to:

• Unlock a pipeline of pending proposals from Chinese investors
• Drive a near-term uptick in FDI inflows from China and Hong Kong
• Strengthen India’s domestic capabilities and reduce reliance on imports

The amendments introduce a time-bound 60-day approval window for sectors including:

• Capital goods
• Electronic capital goods
• Electronic components
• Polysilicon
• Ingot-wafer sectors

This is expected to simplify and expedite collaborations between Indian and Chinese firms in emerging sectors.

Long-Term Outlook​

Crisil Intelligence noted that the real impact of the amendments will be seen over the medium to long term, with anticipated acceleration in:

• Technology partnerships
• Joint ventures
• Mergers and acquisitions

These developments could help India move up the global value chain and become a key player across sectors.

Pending and Approved Proposals​

Government data shows that investment proposals totaling ₹75,691 crore were received under Press Note 3, with only ₹13,625 crore approved. Rejected proposals accounted for approximately 5% of India’s average annual FDI inflowover the past five years.