NITI Aayog Proposes Easing Chinese FDI Rules With 24% Cap Without Security Clearance

New Delhi, July 21 (KNN) In a potentially significant shift in India’s foreign investment policy, NITI Aayog has recommended allowing Chinese entities to acquire up to a 24 percent stake in Indian companies without requiring prior security clearance. 

The proposal, now under review by key ministries, could streamline investment procedures for Chinese firms that currently face stringent regulatory scrutiny.

At present, all investments from countries sharing a land border with India, including China, are subject to mandatory security and political clearances. 

These measures were put in place in July 2020 amid heightened border tensions and concerns over hostile takeovers. 

The current framework requires such investors to register with a special committee under the Department for Promotion of Industry and Internal Trade (DPIIT), and obtain clearances from the Ministries of Home and External Affairs.

According to TOI, a government official confirmed that NITI Aayog’s report has been submitted and is being examined by the Ministries of Finance, Commerce and Industry, and External Affairs. 

“The report has gone. We need to see what happens,” the official stated, indicating that the recommendation is still in the preliminary stages of deliberation.

The proposal comes shortly after External Affairs Minister S. Jaishankar’s recent visit to China—his first in five years—where he met with Chinese Foreign Minister Wang Yi in Beijing. 

During the discussions, Jaishankar raised concerns over China’s restrictive trade practices, including barriers to rare earth magnet exports. 

The two sides also reportedly agreed to take practical steps toward easing military tensions along the Line of Actual Control (LAC) in eastern Ladakh.

If implemented, the proposed 24 percent threshold for Chinese investments without security vetting would mark a cautious yet consequential recalibration of India’s investment policy. 

While national security considerations remain paramount, the move signals a possible effort to balance strategic concerns with economic imperatives.

(KNN Bureau)