The Department for Promotion of Industry and Internal Trade (DPIIT) on Monday notified changes in the foreign direct investment (FDI) policy to permit overseas companies with Chinese shareholding of up to 10 per cent to invest in India through the automatic route, subject to sectoral limits and conditions, PTI reported.However, the relaxation will not apply to entities incorporated in China, Hong Kong or other countries sharing land borders with India. Earlier, foreign firms with even a single shareholding link to such nations were required to seek mandatory government approval for investments across sectors.A DPIIT notification said, “The expression ‘beneficial owner’ of an investment in India will mean the beneficial owner of the investor entity incorporated or registered in a country other than a country which shares a land border with India”.The term will carry the same meaning as defined under Section 2(1)(fa) of the Prevention of Money-laundering Act (PMLA), 2002. Under PMLA rules, controlling ownership interest refers to entitlement to more than 10 per cent of shares, capital or profits in a company.The revised rules also mandate that investments from entities having any direct or indirect ownership link with citizens or firms from land-bordering nations — and not requiring prior approval — will have to follow additional reporting requirements under the standard operating procedure prescribed by DPIIT.The decision to ease the norms was cleared by the Union Cabinet last week. The government had earlier tightened the FDI policy through Press Note 3 (2020) on April 17, 2020, to prevent opportunistic takeovers of Indian companies during the Covid-19 pandemic.Under that framework, investments from entities in countries sharing land borders with India, or where the beneficial owner was situated in such nations, required prior government approval. This was seen as affecting investment flows, particularly from global private equity and venture capital funds with minority Chinese or Hong Kong shareholding.DPIIT has also indicated that proposals for FDI from these countries in specified sectors will be considered under an expedited approval mechanism with a 60-day timeline.Countries sharing land borders with India include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.China currently ranks 23rd in FDI equity inflows into India, accounting for 0.32 per cent share, or USD 2.51 billion, between April 2000 and December 2025.