---
title: "Border Restrictions Squeeze Inward Investment as China FDI Drops to Single Deal in FY26"
url: https://projectchintan.com/article/border-restrictions-squeeze-inward-investment-as-china-fdi-drops-to-single-deal--4bcfy
publisher: Project Chintan
author: Project Chintan Newsroom
section: India
published: 2026-08-02T23:33:53.000Z
modified: 2026-08-03T02:00:49.114Z
language: en-IN
---

# Border Restrictions Squeeze Inward Investment as China FDI Drops to Single Deal in FY26

India authorized only one foreign direct investment proposal from mainland China during the 2025-26 fiscal year. Strict scrutiny under Press Note 3 continues to prioritize national security over capital inflows from neighboring states.

## Key takeaways

- India approved only one Chinese FDI proposal worth ₹1 crore in FY26, matching the single-deal volume of the previous fiscal year.
- Hong Kong outperformed mainland China with 13 approved investment proposals totaling ₹610.42 crore during the same period.
- Singapore and the UK emerged as the top sources of approved government-route FDI, contributing over ₹5,700 crore combined.
- Recent 10% ownership relaxations for land-border countries specifically exclude entities registered in China and Hong Kong.
- Cumulative data shows China accounts for only 0.32% of India's total FDI equity inflows since the year 2000.

## Restrictive Framework Caps Cross-Border Capital

Data from the Department for Promotion of Industry and Internal Trade (DPIIT) reveals that Indian authorities cleared only a single investment proposal from mainland China valued at ₹1 crore during the 2025-26 fiscal year. This marks a significant stagnation compared to the previous year, where China also saw just one approval worth ₹28.71 crore. The trend reflects the continued impact of Press Note 3, a policy implemented in April 2020 to prevent opportunistic acquisitions by nations sharing land borders with India during the pandemic disruption.

While mainland China faced high barriers, Hong Kong secured 13 approvals totaling ₹610.42 crore. Despite these clearances, new regulatory clarifications issued in March confirm that recent relaxations—which allow up to 10% non-controlling beneficial ownership through the automatic route—do not apply to entities registered in China or Hong Kong. This maintains a firewall around seven neighboring nations, including Pakistan, Bangladesh, and Myanmar.

## Singapore and UK Lead Authorized Inflows

During the April 2025-March 2026 period, the Indian government greenlit a total of 63 FDI proposals via the government-approval route, representing an aggregate value of ₹10,292.67 crore ($1.18 billion). This total is a sharp decline from the 2024-25 fiscal year, when 82 proposals worth ₹39,758 crore were authorized.
- Singapore: The primary contributor by value, with five projects worth ₹3,259.88 crore.
- United Kingdom: Secured clearance for five proposals totaling ₹2,477.67 crore.
- Thailand: Contributed two approved proposals valued at ₹1,600 crore.

## Historical Investment Trajectory

China remains a marginal player in India’s long-term investment profile, ranking 23rd in total equity inflows since 2000. Between April 2000 and March 2026, Chinese investment accounted for just 0.32% of total FDI, amounting to $2.51 billion. Hong Kong holds a slightly larger share at 0.62%, ranking 15th with $4.91 billion in cumulative capital. The current fiscal environment suggests that while India remains open to global capital, the vetting process for neighboring states remains a significant hurdle for direct market entry.

Source: The Hindu — National

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Canonical: https://projectchintan.com/article/border-restrictions-squeeze-inward-investment-as-china-fdi-drops-to-single-deal--4bcfy
Reported from: The Hindu — National