India is set to accelerate foreign direct investment (FDI) approvals in seven critical sectors, following the relaxation of China-linked investment norms. The government plans to notify a framework for time-bound approvals, targeting investments by companies with limited Chinese ownership in sectors such as rare-earth magnets and electronic components. This initiative is expected to enhance domestic capacity and attract substantial inflows, with gross foreign direct investment projected to reach $90 billion in the fiscal year 2025-26.
The Cabinet had previously relaxed Press Note 3 of the 2020 series on March 10, allowing automatic approval for overseas investors with up to 10% beneficial ownership from countries sharing a land border with India. However, this decision has yet to be formally notified. The Department for Promotion of Industry and Internal Trade (DPIIT) issued the change through Press Note 2 of the 2026 series on March 15, but stakeholder consultations are ongoing to align it with the Foreign Exchange Management Act (FEMA).
Jai Prakash Shivahare, DPIIT joint secretary, confirmed that the Department of Economic Affairs will issue the necessary notification under FEMA. He noted that the inter-ministerial consultations are crucial as the changes require significant adjustments to existing laws. The new norms are expected to process about 600 pending investment applications, focusing on sectors vital to the Indian economy.
The identified sectors include rare-earth permanent magnets, rare-earth processing, polysilicon and ingot-wafer production, advanced battery components, electronic component manufacturing, capital goods manufacturing, and electronic capital goods. Additional sectors may be added with approval from competent authorities. Despite the eased norms, investments will still require political and security clearances.
Amardeep Singh Bhatia, DPIIT secretary, emphasized that India’s robust economic fundamentals continue to attract global investors. He projected gross FDI in 2025-26 to reach $90 billion, supported by data showing $88.29 billion in gross FDI from April 2025 to February 2026. Bhatia highlighted the role of Invest India in facilitating over $6.1 billion in investments, generating more than 31,000 potential jobs. He affirmed DPIIT’s commitment to simplifying processes and ensuring that investments foster jobs, innovation, and long-term value.
Published in SouthAsianDesk, May 2, 2026
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