Companies with shareholders from neighboring countries previously needed New Delhi's approval for investments

India has eased its norms for investment from neighboring countries, including China, the Economic Times reports.

The decision to amend the existing norms was made at a federal cabinet meeting chaired by Prime Minister Narendra Modi on Tuesday, according to the report.

The policy, which was enacted in 2020 and was aimed at Chinese companies, required approval from the federal government for investments from companies that had shareholders from countries sharing a land border with India.

The move to amend these norms is a major shift in India's foreign direct investment policy after a gap of nearly six years, Xinhua said in a report.

The new guidelines will make it easier to do business in India, facilitate investments, provide the nation with access to new technologies, and help Indian companies integrate with the global supply chain, the Chinese state-run news agency said.

The new norms are likely to boost manufacturing in electronic components, capital goods, and solar cells.

Investment proposals in specified sectors have to be processed and decided on within 60 days, according to the new policy. The norms, however, stipulate that majority ownership and control of the investee company must remain with Indian residents.

New Delhi has received minimal investments from Beijing, but bilateral trade between the two nations has grown recently.

From April 2025 to January 2026, India's exports to China spiked 38% to $15.88 billion and imports rose nearly 14% to $108.18 billion, registering a trade deficit of $92.3 billion.

The shift in policy is the latest sign of improved ties between New Delhi and Beijing, which were strained after a brief border clash in the Himalayas in 2020.

India's diplomatic engagement with China has gathered momentum since 2024, while military-level talks helped defuse border tensions.